The World Bank has released its Global Economic Prospects report, which has downgraded its global economic growth forecast for 2022 from 4.1% to just 2.9% in the wake of the fallout from invasion of Ukraine.
World Bank president David Malpass has warned of the potential for 1970s-style stagflation, and he has raised the prospect that many countries will be hit with a recession. He says that several years of above-average inflation and below-average growth are now likely:
The world economy continues to suffer from a series of destabilizing shocks. After more than two years of pandemic, the Russian Federation’s invasion of Ukraine and its global effects on commodity markets, supply chains, inflation, and financial conditions have steepened the slowdown in global growth. In particular, the war in Ukraine is leading to soaring prices and volatility in energy markets, with improvements in activity in energy exporters more than offset by headwinds to activity in most other economies.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
