World Bank boss in global economic recession warning amid ‘sharpest slowdown in 80 years’
World Bank President warns there might be a global recession
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World Bank President David Malpass has warned that recession could become global, as the organisation further reduced its forecast for global economic expansion in 2022. “The world is again in danger” President Malpass warned in the foreword of the latest edition of the lender’s Global Economic Prospects report. “It is facing high inflation and slow growth at the same time”, Mr Malpass wrote in reference to the economic concept of stagflation.
“Even if a global recession is averted, the pain of stagflation could persist for several years – unless major supply increases are set in motion.”
In a renewed alert to world leaders, Mr Malpas told Bloomberg TV: “Many countries will have a hard time avoiding a recession. We’re not in, it’s not a global recession yet. It could.
“The downside risk is that it could be a global recession. One of the key variables is whether supply comes back online in order to add growth and slow down the inflation rate.
“But this is one of the sharpest slowdowns in 80 years.”
The World Bank report cites the Russian invasion of Ukraine, the pandemic and supply chain disruptions as the main reasons for the global economic slowdown, which could elevate the risk of stagflation. If his fear were to become reality, the most “harmful consequences” would hit “middle- and low-income economies alike.”
Global growth is expected to contract by almost 3 percent from 5.7 percent in 2021 to 2.9 percent in 2022 – that rate is significantly lower than the anticipated 4.1 percent.
Mr Malpass said: “That’s from the 2021 rate which was high because of the recovery from COVID to what we’re looking at now – 2.9 percent in 2022.
“That’s a very sharp slowdown and it’s really hitting the poorer countries hard.”
The world experienced the same economic contraction – known as stagflation – in the 1970s with rising inflation, a slow economic growth and a stagnant unemployment rate.
Then UK Chancellor of the Exchequer Iain Macload warned of the gravity of the situation in Parliament, saying: “We now have the worst of both worlds – not just inflation on the one side and stagnation on the other, but both of them together. We have a sort of stagflation situation.”
The World Bank report has come out as Britons are suffering from rising energy and food costs fuelled by a combination of galloping inflation and a stagnant unemployment rate and wages.
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Economists have warned that Rishi Sunak’s £15million cost-of-living package, aimed at relieving the burden on households of surging energy costs, fails to stem inflation – and will actually push it up.
In April, inflation hit a 40-year high of 9 percent – its highest level since 1982, according to the office for National Statistics (ONS).
The Bank of England says it expects inflation to keep rising this year, with a decrease to 2 percent next year.
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