What are the effects of the 2022 global economic crisis? The World Bank says Russia's invasion of Ukraine — coupled with damage from the COVID-19 pandemic — has exacerbated a slowdown in the global economy, which is entering a potentially prolonged period of weak growth and high inflation. This, in turn, increases the risk of stagflation, with potentially dire consequences for middle- and low-income economies alike. We explain all this on the website Trianvo.
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Effects of the 2022 global economic crisis
Global growth is expected to decline from 5.7% in 2021 to 2.9% in 2022 – well below the 4.1% expected in January, and global growth is expected to continue to hover around that pace over the period 2023 to 2024.
At a time when the war in Ukraine has disrupted economic activity, investment and trade in the short term, and weakened pent-up demand. As well as ending accommodative fiscal and monetary policies. As a result of the damage caused by the pandemic and war, the level of per capita income in developing economies this year will remain about 5% below pre-pandemic trends.
Global economic crisis 2022
Commenting on these circumstances, World Bank President David Malpass said: “The ongoing war in Ukraine, lockdowns in China, disruptions to supply chains, and stagflation risks are hitting global growth hard.”
It will therefore be difficult for many countries to avoid recession risks. Markets are looking to get up and running again, so it is essential to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to address capital misallocation and inequality.
The June edition of the World Economic Prospects provides the first systematic assessment of current global economic conditions compared to the stagflation of the 1970s. With a particular focus on how this situation will impact emerging markets and developing economies. Recovery from the stagflation of the 1970s required large increases in interest rates in major advanced economies. Which played a prominent role in triggering a series of financial crises in emerging markets and developing economies.
Global inflation decline 2024
Global inflation is expected to ease next year, but is likely to remain above inflation targets in many economies. The report indicates that if inflation remains high. A repeat of previous stagflationary decisions could translate into a sharp decline in global economic activity along with financial crises in some emerging market and developing economies.
The report also provides new insights into the effects of war on energy markets and how they cast a shadow on future prospects for global growth. The war in Ukraine has led to a sharp rise in prices for a wide range of energy-related commodities. Higher energy prices will reduce real income. Raising production costs, tightening financial conditions, as well as increasing restrictions in macroeconomic policies, especially in energy importing countries.
The slowdown in growth in advanced economies is expected to rise from 5.1% in 2021 to 2.6% in 2022, 1.2 percentage points lower than the January forecast. The decline in growth is also expected to rise to 2.2% in 2023. This largely reflects the continued decline in fiscal and monetary policy support provided during the pandemic.
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Global Economic Prospects 2022 Report
We will mention in the following lines the Global Economic Prospects Report 2022:
East Asia and the Pacific
Growth is expected to slow to 4.4% in 2022 before improving to 5.2% in 2023.
Europe and Central Asia
The regional economy is expected to contract by 2.9% in 2022 before growing by 1.5% in 2023.
Latin America and the Caribbean
The growth rate is expected to slow to 2.5% in 2022 and 0.91% in 2023.
Middle East and North Africa
Growth is expected to accelerate to 5.3% in 2022 before declining to 3.6% in 2023.
South Asia
The growth rate is expected to slow to 6.8% in 2022 and 5.8% in 2023.
Sub-Saharan Africa
Growth is expected to slow to 3.7% in 2022 and rise to 3.8% in 2023.
