Countries around the world are facing recession as the Ukraine war
hits economies already rocked by the Covid pandemic, the World Bank has warned.
Less developed countries in Europe and east Asia face a "major
recession", it said.
The risk of high inflation and low growth - so-called "stagflation" -
is also higher, World Bank President David Malpass said.
Energy and food bills have been rising around the world.
"The war in Ukraine, lockdowns in China, supply-chain disruptions, and the
risk of stagflation are hammering growth. For many countries, recession will be
hard to avoid," Mr Malpass said.
He also warned in the World Bank's Global Economic Prospects
report for June that the danger of stagflation was
"considerable".
"Subdued growth will likely persist throughout the decade because of weak
investment in most of the world. With inflation now running at multi-decade
highs in many countries and supply expected to grow slowly, there is a risk
that inflation will remain higher for longer."
Also on Tuesday, the World Bank approved $1.49bn (£1.2bn) of additional funding
for Ukraine, which it said "will be used to pay for wages for government
and social workers."
The new financing is part of a more than $4bn support package for the country,
which covers areas including healthcare, education and sanitation.
More than a hundred days have passed since Russia's invasion of Ukraine, but
only now is the sobering size of the shock waves hitting nations and households
thousands of miles away from that epicentre becoming clear.
Developing nations were already struggling to get back on their feet. For every
$20 households there typically earned pre-pandemic, they now only get $19.
But soaring food and energy costs threaten to throw livelihoods further into
reverse, spelling misery and hardship for the most vulnerable.
And that's not just true for poorer countries. One survey shows one in six
British households have turned to a food bank.
That global struggle could be compounded by the higher interest rates being used
to ease inflation, just as government support to ease the impact of the
pandemic is evaporating.
The World Bank is urging immediate action, from debt relief, to urging nations
not to put restrictions on food exports.
Instead they want policymakers to show they are acting together to safeguard
food and energy supplies, reassure volatile markets, and ease price spikes.
Policymakers have already had to tackle an extraordinary battle.
But if we down tools now the World Bank suggests we could face an even more
prolonged and painful crisis.
Hardship today doesn't just mean misery and social unrest, it can blight lives
for years.
The countries in Europe that are most likely to suffer a sharp drop in economic
output in 2022 are Ukraine and Russia, the World Bank forecast.
But it warned that the fallout from the war and the Covid pandemic would be
wider.
"Even if a global recession is averted, the pain of stagflation could
persist for several years - unless major supply increases are set in
motion," Mr Malpass said.
Source:
BBC