The World Bank has warned of a possible global recession. “It will be difficult for many countries to survive a recession,” said World Bank President David Malpass. “This is the sharpest recession in 80 years.”
World Bank on Global Recession, Stagflation
The World Bank on Tuesday warned of stagflation and the growing risk of a global recession. World Bank President David Malpass said:
War in Ukraine, lockout in China, supply-chain disruptions and the threat of stagflation are stifling growth. It will be difficult for many countries to survive the recession.
“As markets look ahead, it is important to stimulate production and avoid trade restrictions. Fiscal, monetary, climate and credit policy changes are needed to combat capital mis-allocation and inequality,” he explained.
The President of the World Bank clarified on Bloomberg on Tuesday that we are not yet in a global recession. However, “the downside is that it could be a global recession,” he said.
“A key variable is whether supply comes back online, adding to growth and slowing the rate of inflation,” Malpass continued.
He emphasized:
This is the sharpest recession in 80 years.
“This is at the rate in 2021 which was higher because of the recovery from Covid, which we are seeing now, 2.9% in 2022,” he elaborated. “It’s a very sharp recession and it’s really hitting poorer countries hard.”
In a report released Tuesday, the bank described: “Global growth is expected to fall from 5.7% in 2021 to 2.9% in 2022 – significantly lower than the 4.1% projected in January.”
The bank also warned about stagflation, saying that the risk of stagflation is substantial. In addition, inflation and slow growth could persist for years, the World Bank noted.
Commenting on the bank’s stagflation warnings, Malpass emphasized:
It is global but it particularly affects developing countries.
“There is a lot of inequality in the world so advanced economies and especially those at the top in advanced economies have done very well over the past decade,” he said.
Malpass elaborated: “The reason for this is because there is a long risk to the world that we are coming out of a very short period of interest rates. Last year, I looked at both fiscal policy … and monetary policy as unknowns.” where was the area.
What do you think of World Bank President Malpass’s comments? Let us know in the comments section below.
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