World Bank slashes global growth forecast

The World Bank cut its global growth forecast on Tuesday as it said the Ukraine conflict had compounded damage from the Covid-19 pandemic and warned over the risks of stagflation.

In its Global Economic Prospects report, the Bank said it now expects global growth in 2022 to slump to 2.9% from 5.7% a year earlier, down from a forecast of 4.1% growth in January.

It is expected to hover around that pace over 2023-24, "as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn", the World bank said.

"As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5% below its pre-pandemic trend."

The bank said the conflict in Ukraine had magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation.

World Bank President David Malpass said: "The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid. Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality."