World Bank warns of inevitable recession in many countries

The World Bank on June 6 lowered its global growth forecast and warned that many countries could fall into Depression when the economy fell into a period of stagnant inflation like the 1970s.

The Washington-based bank said in its latest Global Economic Outlook that it expected economic growth to slow from 5.7% in 2021 to 2.9% this year, lower than expected. 1.2% compared with 4.1% forecast made in January.

The World Bank report shows that growth is expected to hover around this level between 2023 and 2024 while inflation remains above expected thresholds in most economies.

Russian War – Ukraine leading to skyrocketing commodity prices, adding to the inherent damage caused by the COVID-19 pandemic to the global economy, according to the World Bank. According to the organization, the world is now entering what may be a “period of prolonged weak growth and rising inflation”.

“The Ukraine war, the blockade in China, supply chain disruptions and the risk of stagnant inflation are holding back growth. For many countries, recession will be inevitable,” said World Bank President David Malpass.

According to a report released on June 7, growth in advanced economies is forecast to slow sharply to 2.6% in 2022 and further to 2.2% in 2023. advanced in 2021 is 5.1%.

Meanwhile, growth in emerging markets and developing economies is forecast to slow from 6.6% in 2021 to 3.4% in 2022, well below average. 4.8% annually for the period 2011-2019.

As inflation continues to rise in both advanced and developing economies, central banks will have to tighten monetary policy, raising interest rates to curb soaring prices.

Inflation stagnated, which is a combination of economic stagnation and high inflation, has become a major concern today. This trend is reminding professionals and older consumers of the late 1970s, when the oil shock and sluggish economy led to two recessions, known as double recessions, in the early 1970s. 1980.

To mitigate the risk of history repeating itself, the World Bank called on policymakers to coordinate aid to Ukraine, curb soaring food and oil prices, and draw up debt relief measures for economies. developing economy.