The World Bank has warned that the risks of stagflation continue to rise, and that recession will be "difficult to avoid" for many countries. The World Bank's Global Economic Prospects report stated that "the worsening damage caused by the COVID-19 pandemic and the war in Ukraine has compounded the slowdown in the global economy, which is entering what could be a prolonged period of weak growth and rising inflation," indicating that "this raises the risks of recession, with potentially severe consequences for both middle and low-income economies."
It was reported that growth is expected to decrease from 5.7% in 2021 to 2.9% in 2022, lowering its January forecast of 4.1% for 2022, and it is expected to hover around this pace during the years 2023 and 2024, particularly as the war in Ukraine disrupts activity, investment, and trade in the near term.
David Malpass, the World Bank Group President, stated: "The war in Ukraine, lockdowns in China, supply chain disruptions, and stagflation risks are hitting growth. For many countries, recession will be difficult to avoid." He added: "Markets are looking ahead, so it is essential to encourage production and avoid trade restrictions. Financial, monetary, and climate changes, as well as debt policy, are necessary to address poor capital allocation and inequality."
