A participant stands near the World Bank logo at the International Monetary Fund – World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018.
Johannes Christo | Reuters
WASHINGTON – World Bank lower annual global growth forecast for 2022 on Monday by almost a percentage point, down from 4.1% to 3.2%, citing the impact that Russia’s invasion of Ukraine is having on the world economy.
World Bank President David Malpass told reporters during a conference call that the single biggest factor leading to the reduced growth forecast is the expected 4.1% economic contraction across the continent. Europe and Central Asia, according to for Reuters.
Malpass said other factors behind the slower-than-forecast growth in January include higher food and fuel costs borne by consumers in the world’s advanced economies.
This is partly a result of Western sanctions on Russian energy, which have sent oil and gas prices up worldwide. Supply disruptions to Ukraine’s agricultural exports are also believed to have contributed to higher prices.
Russia has blockaded Ukraine’s major Black Sea ports, making it extremely dangerous for ships carrying grain and other products to pass through the vital maritime route linking Ukraine to the rest of the world.
Malpass told reporters that the World Bank was “preparing for an ongoing crisis response, in the face of multiple crises”. “Over the next few weeks, I expect to discuss with our board a new 15-month crisis response package worth approximately $170 billion to cover April 2022 through June 2023.”
This funding package for the Ukraine crisis is even larger than the one organized by the World Bank for Covid-19 relief, amounting to 160 billion USD.
However, the damage that Russia’s invasion of Ukraine has done to the global economy pales in comparison to the catastrophic impact it has had on the Ukrainian economy and to a lesser extent Russia.
Earlier this month, the World Bank forecast Ukraine’s annual GDP would shrink 45.1%, a staggering number for a country of more than 40 million people.
Before the war, analysts had predicted that Ukraine’s GDP would grow sharply in the coming years.
The Russian economy is also taking a big hit, largely due to the effects of NATO and Western-backed sanctions and trade embargoes.
In early April, the World Bank predicted that Moscow’s GDP would shrink by 11.2% this year due to sanctions.
Russian President Vladimir Putin on Monday stressed that Western powers had failed in what he called a “lightning economic campaign” against Russia.
After falling sharply in the first weeks of the war, the Russian ruble recovered much of its value. But economists say this recovery is an illusion created by strict domestic currency controls imposed by the Kremlin, which have falsely inflated the value of the ruble inside Russia.
