The head of the World Bank has warned that Russia’s invasion of Ukraine could cause a global recession with soaring food, energy and fertilizer prices.
It’s hard to “see how we can avoid a recession,” David Malpass said in a speech to a US trade meeting on Wednesday.
He added that the string of coronavirus-related lockdowns in China was raising concerns about a slowdown.
Malpass’ comments are the latest warning about the growing risk that the global economy may be on the cusp of deflation.
“It’s hard now that we’re looking at global GDP…to see how we can avoid a recession,” Malpass said, without giving specific forecasts.
He added, “The idea of doubling energy prices is sufficient in itself to cause a recession.”
Last month, the World Bank cut its forecast for global economic growth for this year by a full percentage point, to 3.2 percent.
GDP is a measure of economic growth. It is one of the most important ways to measure how well or poorly an economy is doing, and it is closely monitored by economists and central banks.
It helps companies judge when to expand and hire more workers, or invest less and reduce their workforce.
And governments use it to guide decisions about everything from taxes to spending. It is a key measure, along with inflation, that helps central banks when considering raising or lowering interest rates.
Malpass said that many European countries are still highly dependent on Russia for oil and gas, despite moving ahead with plans to reduce their dependence on Russian energy.
He added during his remote talk, organized by the American Chamber of Commerce, that Russia’s moves to cut off gas supplies could cause a “significant slowdown” in the region.
He said high energy prices were already weighing on Germany, which is the largest economy in Europe and the fourth largest in the world.
Malpass said developing countries are also affected by shortages of fertilizer, food and energy.
Malpass also raised concerns about shutdowns in some major Chinese cities – among them the financial and manufacturing hub and shipping hub Shanghai – which he said “still have consequences or slowdown effects on the world”.
“China was already going through some contraction in real estate, so the forecast for Chinese growth before the Russian invasion has already softened significantly for 2022,” he said.
“Then Covid waves triggered lockdowns that further lowered the growth outlook for China,” he added.
Chinese Premier Li Keqiang also said Wednesday that the world’s second-largest economy has been hit harder by the latest round of lockdown than it was at the start of the epidemic in 2020.
He also called on officials to take more measures to restart factories after the closure.
“Progress is not satisfactory,” Lee said. “Some provinces reported that only 30 percent of businesses have reopened… and the percentage should be raised to 80 percent within a short time.”
Full or partial closures were imposed in dozens of Chinese cities in March and April, including the prolonged closure of Shanghai.
The measures led to a sharp slowdown in economic activity across the country.
Official figures in recent weeks have shown that large parts of the economy have been affected, from manufacturers to retailers.
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