The World Bank cuts global growth forecast in 2022 to 2.9% from April’s 3.2% and 4.1% in January, saying that the danger of stagflation is considerable today while adding that energy and food prices have been rising around the world.
Slowing down from a 5.7% growth in 2021, the World Bank President David Malpass said that the risks of stagflation, the Russia-Ukraine war, and lockdowns in China have been hammering economic growth, which will lead to a recession that will be hard to avoid for many countries.
The president noted that global inflation is expected to moderate next year, it will likely remain above target in many economies.
The World Bank also cut U.S. GDP growth in 2022 to 2.5% from 3.7% due to higher energy prices, tighter financial conditions and additional supply disruptions caused by the invasion of Ukraine by Russia.
The bank cut the outlook for China’s economic expansion to 4.3% this year due to larger-than-expected impact from Covid-19 resurgence in major cities and related lockdowns. Meanwhile, Euro-area growth is forecast to slow to 2.5% this year, 1.7 percentage points less than the forecast in January.
Global growth in 2023-24 is expected to expand around the same level in 2022, while inflation remains above target in most countries.