On June 7, the World Bank significantly cut its global growth forecast and warned that as the Russian-Ukrainian war continues, global growth slows and the economy enters a stagnant period, many countries could fall into recession. The latest issue of Global Economic Prospects indicates that global economic growth is expected to decline from 5.7% in 2021 to 2.9%, 1.2 percentage points below the 4.1% forecast in January. The expansion in emerging markets and developing economies is expected to decline from 6.6% in 2021 to 3.4%, well below the annual average of 4.8% between 2011 and 2019.
It also mentioned that the current high inflation and low growth situation is similar to the 1970s, a period of severe stagnation in which advanced economies need to raise interest rates significantly and trigger a series of financial crises in emerging markets and developing economies. World Bank President David Malpass said the Russian-Ukrainian war, the lockdowns in communist China, supply chain disruption, and stagflation risk are hitting economic growth. For many countries, a recession will be inevitable. To reduce the risk of a historical repeat, the World Bank urged policymakers to coordinate aid to Ukraine, cope with the soaring oil and food prices and provide debt relief to developing economies.
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