For nations big and small around the world, the hope of averting a recession is fading, world Bank notified on Tuesday.
The bitter war in Ukraine, continued supply chain bottlenecks, Covid-related lockdowns in China, and skyrocketing energy and food prices are hitting economies all along the income scale, burdening them with slower growth and runaway inflation.
This string of problems is “hammering growth,” World Bank President David Malpass said in a statement. “For many countries, recession will be difficult to avoid.”
Global growth is expected to slow to 2.9% this year, from 5.7% in 2021. The outlook, presented in the bank’s latest Global Economic Prospects report, is not only gloomier than that produced six months, before war broke out in Ukraine, but also below. the 3.6% predicted in April by the International Monetary Fund.
Growth is expected to remain subdued in 2023. Growth for the 2020s is expected to fall below the average achieved over the previous decade, according to the report.
Apart from a handful of oil-exporting nations like Saudi Arabia, which enjoy prices above $100 a barrel, there is only one place on the planet that hasn’t seen its outlook dim. Among the most advanced economies like the United States and Europe, growth is expected to slow to 2.5% this year. China’s growth is expected to fall to 4.3% from 8.1% in 2021.
The Russian economy is expected to contract by 8.9% – a sharp reduction, but still lower than forecasts by other forecasters.
Emerging countries will face the hardest setback, where the blows of the pandemic and the war in Ukraine are still reverberating. The poorest nations will get poorer.
Per capita income in developing economies will fall 5% below where it was before the pandemic hit, the report said. At the same time, the public debt burden is rising, a burden that will increase as interest rates rise. Around 75 million more people will face extreme poverty than expected before the pandemic.
In some ways, the economic threats mirror those of the 1970s, when spiraling oil shocks followed by rising interest rates caused crippling stagflation, the bank said. This combination of events triggered a series of financial crises that rocked developing countries, resulting in what has been called a “lost decade” of growth.
The bank, which provides financial support to low- and middle-income countries, reiterated its familiar basket of remedies that include limiting government spending, using interest rates to dampen inflation and avoiding restrictions. trade and subsidies. He also said public spending should prioritize protecting the most vulnerable.
This protection includes ensuring that low-income countries have an adequate supply of Covid vaccines.
