By Express News Service
NEW DELHI: Taking a grim view of the ramifications of the ongoing war in Ukraine, the World Bank on Tuesday warned of impending stagflation — a deadly combination low economic growth and high inflation.
“The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hampering growth. For many countries, the recession will be hard to avoid,” World Bank president David Malpass said.
The World Bank also slashed its global economic growth forecast for 2022 to 2.9% from 4.1% its January 2022 projection, which had not accounted for the disruption arising from Russia’s invasion of Ukraine. The World Bank’s updated Global Economic Prospects report rules out a rebound even next year, projecting only 3% growth for the world in 2023 citing a host of challenges ranging from high commodity prices to monetary tightening.
“The global outlook faces significant downside risks, including intensifying geopolitical tensions, an extended period of stagflation reminiscent of the 1970s, widespread financial stress caused by rising borrowing costs, and worsening food insecurity,” it said.
As for India, the global agency cut the FY23 GDP growth forecast to 7.5% from its earlier estimate of 8.7% due to factors such as rising inflation, supply chain disruptions, and geopolitical tensions upsetting the recovery in consumption. It predicts India’s growth to slow further to 7.1% in FY24.
