The World Bank lowers its prediction for global growth to 2.9% and warns of the risk of “stagflation.”

Washington:  the World Bank cut its growth forecast for the world by almost a third, to 2.9% for 2022. It said that Russia’s invasion of Ukraine has made the damage from the COVID-19 pandemic worse, and that many countries are now in recession.

The war in Ukraine made the global economy slow down even more. The global economy is now in what the World Bank called “a long period of slow growth and high inflation,” and the outlook could still get worse.

At a news conference, David Malpass, president of the World Bank, said at a news conference that if downside risks came true, global growth could drop to 2.1 percent in 2022 and 1.5 percent in 2023. This would bring per capita growth close to zero.

Malpass said that the war, new COVID lockdowns in China, problems in the supply chain, and the growing risk of stagflation were all hurting global growth. Stagflation is a period of slow growth and high inflation that was last seen in the 1970s.

“The risk of stagflation is high right now,” Malpass wrote in the report’s introduction. “Slow investment in most of the world will likely keep growth slow for the rest of the decade.” “Since inflation is at its highest level in decades in many countries and supply is expected to grow slowly, there is a chance that prices will stay high for a longer time.”

Malpass said that the rate of growth around the world is expected to slow by 2.7% between 2021 and 2024. This is more than twice as much as what happened between 1976 and 1979.

The report warned that the interest rate hikes needed to control inflation at the end of the 1970s were so big that they caused a global recession in 1982 and a series of financial crises in emerging markets and developing economies.

Ayhan Kose, who runs the World Bank unit that makes the forecast, told reporters that there was “a real threat” that tightening financial conditions faster than expected could send some countries into a debt crisis like the one in the 1980s.

Even though some things were the same, there were also important differences, such as the strength of the U.S. dollar and generally lower oil prices, as well as generally strong balance sheets at major financial institutions.

To reduce the risks, Malpass suggested that policymakers work together to coordinate their assistance to Ukraine, increase food and energy production, and avoid imposing export and import restrictions that could cause oil and food prices to rise again.

He also asked for more work to be done to reduce debt, saying that some middle-income countries might be at risk. He also asked for more work to stop COVID and a faster move to a low-carbon economy.

The bank predicted that global growth would slow from 5.7 percent in 2021 to 2.9 percent in 2022, which is 1.2 percentage points less than what it predicted in January. It also said that growth was likely to stay around that level in 2023 and 2024.

It said that inflation should slow down around the world next year, but that it would probably stay above goals in many economies.

Following 5.1 percent growth in 2021, advanced economies were expected to contract to 2.6 percent in 2022 and 2.2 percent in 2023.

Growth in the U.S. was expected to slow to 2.5% in 2022, down from 5.7% in 2021. Growth in the euro zone was expected to slow from 5.4% to 2.5%.

Emerging markets and developing economies were expected to grow by only 3.4% in 2022. This is down from a growth rate of 6.6% in 2021 and well below the average annual growth rate of 4.8% seen from 2011 to 2019.

After growing by 8.1% in 2021, China’s economy was expected to grow by only 4.3% in 2022.

Higher energy prices could help commodity exporters in the short term, but the negative effects of the war in Ukraine would more than make up for that. Growth predictions for 2022 have been lowered in nearly 70% of emerging markets and developing economies because of the war in Ukraine.

The economy of Europe and Central Asia, which does not include Western Europe, was expected to shrink by 2.9% after growing by 6.5% in 2021. In 2023, however, it was expected to grow by 1.5%. It was thought that Ukraine’s economy would shrink by 45.1% and Russia’s by 8.9%.

The bank said that growth in Latin America and the Caribbean was expected to slow sharply, reaching only 2.5% this year and going down to 1.9% in 2023.

Rising oil prices would help the Middle East and North Africa, where growth is expected to reach 5.3% in 2022 and then slow to 3.6% in 2023. South Asia, on the other hand, would see growth of 6.8% this year and 5.8% in 2023.

The bank said that growth in Sub-Saharan Africa was expected to slow to 3.7% in 2022 from 4.2% in 2021.