World Bank Slash Global Economy Outlook Amid Russia War

The World Bank has sharply downgraded its outlook for the global economy, pointing to Russia- Ukraine war, the prospect of widespread food shortages and concerns about the potential return of “stagflation” — a toxic mix of high inflation and sluggish growth unseen for more than four decades.

The 189-country anti-poverty agency predicted Tuesday that the world economy will expand 2.9% this year. That would be down from 5.7% global growth in 2021 and from the 4.1% it had forecast for 2022 back in January.

“For many countries, recession will be hard to avoid,” said David Malpass, the World Bank’s president.

The agency doesn’t foresee a much brighter picture in 2023 and 2024: It predicts just 3% global growth for both years.

For the United States alone, the World Bank has slashed its growth forecast to 2.5% this year from 5.7% in 2021 and from the 3.7% it had forecast in January. For the 19 European countries that share the euro currency, it downgraded the growth outlook to 2.5% this year from 5.4% last year and from the 4.2% it had expected in January.

In China, the world’s second-biggest economy after the United States, the World Bank expects growth to slow to 4.3% from 8.1% last year. China’s zero-COVID policies, involving draconian lockdowns in Shanghai and other cities, brought economic life to a standstill. The Chinese government is providing aid to ease the economic pain.

Emerging market and developing economies are collectively forecast to grow 3.4% this year, decelerating from a 6.6% pace in 2021.

Russia’s attack of Ukraine has severely disrupted global trade in energy and wheat, battering a global economy that had been recovering robustly from the coronavirus pandemic. Already-high commodity prices have gone even higher as a result, threatening the availability of affordable food in poor countries.