June 7, 2022—The global economy is entering a period of “feeble growth” mixed with higher inflation, and that poses risks to people in both middle- and low-income countries, the World Bank warned today. The organization adjusted its growth forecasts downward to 2.9 percent for the year. That is considerably lower than last year’s expansion of 5.7 percent. The Russian-Ukraine war is taking a toll on growth around the world. Furthermore, fiscal and monetary policies are shifting from accommodation to restraint.
World Bank President David Malpass also cited China’s lockdowns, supply-chain disruptions, climate, and countries’ debt policies as causes for concern. The World Bank’s June report compares this era with the stagflation of the 1970s.
The bad news is likely to impact poorer countries the hardest. “Developing economies will have to balance the need to ensure fiscal sustainability with the need to mitigate the effects of today’s overlapping crises on their poorest citizens,” said Ayhan Kose, director of the World Bank’s Prospects Group.
Source: The World Bank
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