For nations large and small around the world, hopes of avoiding a recession are fading, the World Bank warned on Tuesday.
The war in Ukraine, the ongoing suffocation of the supply chain, the Covid-19 blockades in China and the sharp rises in energy and food prices are hitting economies along the scale. revenue, forcing them to grow more slowly and rise in inflation.
This set of problems is “hammering growth,” World Bank President David Malpass said in a statement. “For many countries, the recession will be difficult to avoid.”
Global growth is expected to slow to 2.9 percent this year from 5.7 percent in 2021. The outlook, presented in the bank’s latest Global Economic Prospects report, is not only worse. than those produced six months ago, before the war broke out in Ukraine, but also below. 3.6 percent projected in April by the International Monetary Fund.
Growth is expected to remain quiet in 2023. Growth for the 2020s is projected to fall below the average achieved in the previous decade, according to the report.
Aside from a handful of oil-exporting nations like Saudi Arabia benefiting from prices of more than $ 100 a barrel, there is hardly a place in the world that has not seen its prospects diminish. Among the most advanced economies such as the United States and Europe, growth is expected to slow to 2.5 percent this year. China’s growth is expected to fall to 4.3% from 8.1% in 2021.
Russia’s economy is expected to contract by 8.9 percent, a significant reduction, but even smaller than the forecasts of other forecasters.
Emerging nations will face the hardest setback, where the blows of the pandemic and the war in Ukraine still resonate. The poorest nations will be impoverished.
According to the report, the per capita income of developing economies will fall 5% below where it was before the pandemic. At the same time, the public debt burden is rising, a burden that will increase as interest rates rise. Approximately 75 million more people will face extreme poverty than expected before the pandemic.
In a way, the economic threats reflect those faced in the 1970s, when spiraling oil shocks followed by rising interest rates caused paralyzing inflation, the bank said. This combination of events triggered a series of financial crises that shook developing nations, giving rise to what was known as a “lost decade” of growth.
The bank, which provides financial support to low- and middle-income countries, reiterated its family basket of remedies that include limiting government spending, using interest rates to curb inflation, and avoiding trade restrictions and subsidies. . He also said that public spending should give priority to the protection of the most vulnerable.
This protection includes ensuring that low-income countries have sufficient supplies of vaccines against Covid.