The World Bank is lowering its growth forecast for the year because of Russia’s invasion of Ukraine.
World Bank President David Malpass announced during a conference call on Monday that the global growth forecast for 2022 will be downgraded from 4.1 percent to 3.2 percent.
The nearly 1 percentage point decrease was driven by a reduction in the outlook for Europe and central Asia, which encompasses Russia and Ukraine, Reuters reported, citing Malpass. The region is now expected to see a 4.1 percent contraction.
“The war in Ukraine and China’s COVID-related shutdowns are pushing global growth rates even lower and poverty rates higher,” Malpass said in his opening remarks at the spring meetings 2022 media roundtable.
“People are facing reversals in development for education, health and gender equality. They’re facing reduced commercial activity and trade. Also, the debt crises and currency depreciations have a burden that falls heavily on the poor. Many discussions this week will focus on these topics,” he said.
Forecasts are also contracting for some advanced and developing economies because goods and energy prices are increasing, Reuters reported, citing Malpass. The World Bank president said he is “deeply concerned about developing countries.”
“They’re facing sudden price increases for energy, fertilizer, and food, and the likelihood of interest rate increases. Each one hits them hard,” he added.
Additionally, Malpass said the board of the international financial institution will likely talk about a 15-month crisis response package worth roughly $70 billion that will span from April 2022 through June 2023, according to Bloomberg. Nearly $50 billion of that sum would be dispatched in the upcoming three months.
“This is a continued, massive crisis response given the continuation of the crisis,” Malpass said, according to Bloomberg. He also noted that the new package would be larger than the $157 billion marshalled in the first phase of the coronavirus pandemic.
The World Bank’s announcement comes in the seventh week of Russia’s invasion of Ukraine, which began on Feb. 24. The conflict, which led a number of countries to impose sweeping sanctions against Russia, has damaged Moscow’s economy, but its ramifications have rippled worldwide.