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World Bank slashes global growth forecast to 3.2% from 4.1%, citing Ukraine war


An individual stands in front of the logo of World Bank during the International Monetary Fund Annual Meeting 2018 in Nusa Dua Bali, Indonesia on October 12, 2018.

Reuters| Reuters

WASHINGTON — World Bank lowered its annual global growth forecastFor 2022, Monday, by almost a whole percentage point. It was down from 4.1% and 3.2%, due to the effect that Russia’s invasion in Ukraine is having on world economic.

On a conference call, David Malpass, President of the World Bank said that 4.1% economic contraction across Europe and Central Asia was the biggest factor in the reduction in growth. accordingReuters

Malpass also stated that there are other reasons for the decline in growth in comparison to January’s forecast. These include rising fuel and food prices, which consumers across developed countries have had to bear.

They are partially due to Western sanctions against Russia energy that have driven up oil and gas prices worldwide. Price rises can also be attributed to disruptions in the supply of Ukrainian agricultural products.

Russia blocked Ukraine’s main Black Sea ports making it very dangerous for grain-carrying vessels to use the vital maritime route connecting Ukraine with the rest of the globe.

Malpass said that the World Bank “is preparing for a continuous crisis response, due to multiple crises.” “I expect to talk with my board about a 15-month emergency response budget of approximately $170 Billion to cover April-2022 and June 2023 over the next few weeks.”

The Ukraine crisis funding package for Covid-19 relief is larger than that of the World Bank, at $160 billion.

Yet, Russia’s incursion into Ukraine is still a disaster for the global economy. Its devastating effects on Ukraine’s economy and Russia’s economy are far less than the one it caused.

In a projection by the World Bank, Ukraine’s GDP will fall by 45.1% annually, which is astonishing for a nation of over 40 million.

Analysts had forecasted that Ukraine’s GDP will rise rapidly in the years ahead of the conflict.

Russia’s economy has also been severely affected by the Western-backed and NATO-backed trade sanctions.

In April, the World Bank forecast that Moscow’s GDP will fall 11.2% due to sanctions.

Russian President Vladimir Putin said Monday that the West had failed to defeat Russia’s “blitzkrieg” economic war against it.

The Russian ruble is now worth a large amount of what it was in those first few weeks after its sharp fall. Economists say this is a fabrication due to strict currency control imposed in Russia by the Kremlin. This has falsely increased the value of Russia’s ruble.