World Bank slashes 2022 global growth forecast to 2.9%

The World Bank has slashed its growth estimate for the global economy to 2.9 percent, 1.2 percentage points below the January forecast, due to the Russian offensive in Ukraine which has caused a severe downturn.

The conflict in Ukraine had magnified the slowdown in the global economy, which was now entering what could become "a protracted period of feeble growth and elevated inflation," the World Bank said on Tuesday in its Global Economic Prospects report, warning that the outlook could still grow worse.

In a news conference, World Bank President David Malpass said global growth could fall to 2.1 percent in 2022 and 1.5 percent in 2023, driving per capita growth close to zero, if downside risks materialised.

Malpass said global growth was being hammered by the conflict, fresh Covid lockdowns in China, supply-chain disruptions and the rising risk of stagflation -- a period of weak growth and high inflation last seen in the 1970s.

"The danger of stagflation is considerable today," Malpass wrote in the foreword to the report. 

"Subdued growth will likely persist throughout the decade because of weak investment in most of the world. With inflation now running at multi-decade highs in many countries and supply expected to grow slowly, there is a risk that inflation will remain higher for longer."

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'Risk of malnutrition and famine'

"Several years of above-average inflation and below-average growth are now likely, with potentially destabilising consequences for low- and middle-income economies", Malpass said.

"There’s a severe risk of malnutrition and of deepening hunger and even of famine in some areas", he added.

Growth in developing economies is also projected to roughly fall in half this year, slowing from 6.6 percent in 2021 to 3.4 percent in 2022.

Russia's onslaught in Ukraine has also pushed up agricultural commodity prices sharply, worsening food insecurity and extreme poverty in some regions.

Global consumer price inflation has soared higher around the world and is above central bank targets in almost all countries.

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