World Bank warns global economy risks further deterioration

World Bank warns global economy risks further deterioration

Sourced from the web by Tracy Cabrera

World Bank president David Malpass. (Photo: Al Jazeera)

MANILA — Despite the steady opening of the economy in most places where the coronavirus pandemic has been slowing down and infections are decreasing, the World Bank (WB) has warned that the global economy may be heading for years of weakening growth and rising prices—a toxic combination that will test the stability of dozens of countries like the Philippines still struggling to rebound from the pandemic.

“Not since the 1970s—when twin oil shocks sapped growth and lifted prices, giving rise to the malady known as ‘stagflation’—has the global economy faced such a challenge,” former under secretary of the United States Treasury for International Affairs and current WB president David Malpass disclosed while announcing that the bank has slashed its annual global growth forecast to 2.9 percent from January’s 4.1 percent.

“(The) subdued growth will likely persist throughout the decade because of weak investment in most of the world. Fallout from Russia’s invasion of Ukraine has aggravated the global slowdown by driving up prices for a range of commodities, fueling inflation. Global growth this year will be roughly half of last year’s annualized rate and is expected to show little improvement in 2023 and 2024,” Malpass added.

Based on comparative statistics and data, the situation will be the sharpest slump after an initial post-recession rebound that the global economy has suffered in more than 80 years and the situation could get even worse if the Ukraine war fractures global trade and financial networks or soaring food prices spark social unrest in importing countries.

“The risk from stagflation is considerable with potentially destabilizing consequences for low- and middle-income economies . . . There’s a severe risk of malnutrition and of deepening hunger and even of famine in some areas,” the head of the multilateral development institution in Washington highlighted.

As a final warning, Malpass cited that if the worst outcomes materialize, global growth over the next two years could fall “close to zero.” (ai/mtvn)

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