World Bank President David Malpass believes a global recession is on the cards and many countries will be unable to avoid it. He also said that this is the sharpest slowdown in 80 years. An economic slowdown means a decline in the growth of a country’s GDP, indicating a decline in production and earnings. Now, if you add an upcoming recession to the mix, things do look bad for the global economy.
World Bank president on recession
David Malpass recently warned about the risks of a global recession and stagflation. There are a lot of factors contributing to this, including the Russia-Ukraine crisis, China lockdown, supply-chain problems, and stagflation. This will make it very difficult for most countries to avoid recession.
Stagflation is defined as a period of poor economic development and much higher unemployment—or economic stagnation—along with increasing prices (i.e., inflation). It can also be described as a period of high inflation that coincides with a drop in the gross domestic output (GDP).
David also said that we hadn’t entered a recession yet, but the problem is it could turn into a global crisis. Therefore, it is important to encourage production, increase trade, and reduce capital misallocation and inequality. All this can somewhat help keep things under control. However, the biggest problem is the supply-demand equation. We have to wait and see if supply comes back and inflation gets under control.
The sharpest slowdown in 80 years
The recent hikes in interest rates have been very quick, which is good for controlling inflation, but the economy has come to a standstill. Global growth is also going to slow down quite drastically, from 5.7% in 2021 to 2.9% in 2022. The economic problems might be here for years, says David, and the worst part is it will hit developing countries the most. It can also be seen already as inflation rates in countries like India are much higher than in the US. At the same time, the GDP growth and economy are not remarkable.
What are your thoughts as World Bank President believes a global recession is on the cards? And how long do you think it will last before we enter another growth phase? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.