September 26, 2022
World Bank cuts global growth forecast and warns of stagflation risk

Global growth is now expected to fall to 2.9%, a decrease of 1.2 percentage points from the previous forecast at the start of the year, the World Bank announced on Tuesday. The international financial institution said that alarm bells are flashing red for a “protracted period of feeble growth and elevated inflation.”

That growth, which is far less than the 5.7% experienced globally last year, is expected to remain around the 2.9% level throughout next year and 2024, the World Bank predicted on Tuesday. It additionally said that the level of per capita income in developing economies this year would be nearly 5% below pre-pandemic trends.

“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,” said World Bank President David Malpass.

The World Bank report also raised the specter of stagflation in some countries. Stagflation, a portmanteau of stagnation and inflation, is when inflation is rising at the same time that economic growth and the labor market are struggling.

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