(8 June 2022 – Global) The global economy may be set to endure a protracted period of weak growth and rising prices with the toxic combo testing financial stability in the wake of the pandemic, the World Bank warns.
The global economy hasn’t faced such a severe universal challenge since the oil price shock induced stagflation period during the 1970s.
“This will be the sharpest slump after an initial post-recession rebound that the global economy has suffered in more than 80 years. And the situation could get even worse if the Ukraine war fractures global trade and financial networks or soaring food prices spark social unrest in importing countries” said World Bank President David Malpass.
“The risk from stagflation is considerable with potentially destabilizing consequences for low- and middle-income economies. There’s a severe risk of malnutrition and of deepening hunger and even of famine in some areas. The global economy is being hampered by inadequate production capacity for key goods. It’s very important to increase supply massively to really try to get at inflation directly by more production. Unfortunately, there aren’t signs of that very much yet” Malpass added.