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Compounding the damage from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation, said the World Bank in the latest Global Economic Prospects report.
This raises the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike, it said.
Global growth is expected to slump from 5.7% in 2021 to 2.9% in 2022— sharply lower than 4.1% anticipated in January, it said. It’s expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn, it said.
Growth in advanced economies is projected to sharply decelerate from 5.1% in 2021 to 2.6% in 2022—1.2 percentage point below projections in January. Growth is expected to further moderate to 2.2% in 2023, largely reflecting the further unwinding of the fiscal and monetary policy support provided during the pandemic.
Among emerging market and developing economies, growth is projected to fall from 6.6% in 2021 to 3.4% in 2022—well below the annual average of 4.8% over 2011-2019.
