World Bank slashes economic growth outlook after Russian-Ukrainian war
The World Bank has cut its forecast for global economic growth this year in the wake of Russia’s war in Ukraine and is preparing a $170 billion aid package to help countries cope with the confluence of war, pandemic and skyrocketing inflation.
The Washington-based institution lowered its forecast for global growth in 2022 to 3.2% – a sharp drop from January’s forecast of 4.1%, World Bank President David Malpass said on Monday. to journalists. The decline stems from a lower outlook for Europe and Central Asia, which includes both Russia and Ukraine.
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By comparison, the global economy grew by 5.7% in 2021.
Malpass said the war between Russia and Ukraine – the worst conflict Europe has seen in decades – has exacerbated the financial pressures of the COVID-19 pandemic as well as the rising cost of living, saying that it is necessary to provide assistance immediately. As a result, the World Bank is preparing a $170 billion spending program to offset some of the economic fallout from the war.
“This is an ongoing and massive response to the crisis given the continuing crisis,” Malpass said, noting that the latest relief plan will go beyond the $157 billion approved last year to combat the COVID-19 pandemic.
Under the proposal, $50 billion would be spent over the next three months, with an additional $120 billion in relief allocated over the following year. World Bank members will discuss the spending initiative this week at their annual spring meeting with the International Monetary Fund.
“I am deeply concerned about developing countries,” Malpass said. “They are facing sudden increases in energy, fertilizer and food prices, as well as the likelihood of interest rate increases. Each of these is hitting them hard.”
The IMF – the World Bank’s sister organization – echoed that sentiment last week, with managing director Kristalina Georgieva warning that the war in Ukraine has weakened economic prospects for much of the world and skyrocketing inflation constituted a “clear and present danger” to the global economy.
Georgieva told reporters the IMF would also cut its growth outlook for 143 economies – accounting for around 86% of total economic output worldwide – in 2022 and 2023 as a result of the war, which has driven up commodity prices. food and energy in the world.
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She said the conflict had sent “shockwaves” around the world, dealing a heavy blow to countries still recovering from the COVID-19 pandemic.
“The root cause of what we face today is war, and it is war that must end,” Georgieva said in a speech at the Carnegie Endowment for International Peace in Washington. “In economic terms, growth is down and inflation is up. In human terms, people’s incomes are down and hardship is up.”