(Washington Comprehensive) World Bank President Malpass warned that global energy production will take years to shift from relying on Russia to supply diversification, which will stretch the economy into low growth and high inflation, which is the risk of stagflation.
Malpass said in a speech at Stanford University on Wednesday (September 28) that the possibility of a recession in Europe has increased, China's growth has slowed sharply, and U.S. economic output has shrunk in the first half of this year. All these will have serious consequences for in developing countries in .
He said that to cope with the current "perfect storm" of rising interest rates, high inflation and slowing growth, new macro and micro-economic measures must be provided, including more targeted expenditures and increased supply.
World Bank President Malpass warned last Wednesday (September 28) that the coronavirus and the Russian-Ukrainian war would put the world economy at risk of stagflation. (AFP)
He also revealed that the World Bank will release the "Poverty and Shared Prosperity" report next week shows that the global poverty reduction has slowed since 2015, before the COVID-19 pandemic, putting another 70 million people in extreme poverty. The
report also showed that the global median revenue fell by 4%, the first time the Bank has dropped since 1990. "Developing countries are facing extremely challenging near-term prospects, including soaring food, fertilizer and energy prices, rising interest rates and credit spreads, currency depreciation and capital outflows," said Malpass. "One of the urgent dangers facing developing countries is a sharp slowdown in global growth, exacerbating global recession." He noted that amid the intensified climate warming, many developing countries are still working to return to their pre-COVID-19 income levels.
He said that as developed economies adopt fiscal policies that are conducive to improving debt levels, it is not clear whether there is enough global capital to meet the needs of developed economies and there is still enough surplus funds to meet the investment needs of developing countries.
He urged countries to find ways to reduce inflation, including improving fiscal efficiency and increasing spending targeting the poor and vulnerable groups, in addition to synchronizing hikes in .
Malpass called on countries to find ways to reduce inflation and increase spending on the poor and vulnerable. (AFP archives photo)
He said that such adjustments will improve global capital allocation, provide ways to reduce inflation, and restart median income growth.
He also said that it is urgent to provide more funds for education, health care and climate change adaptation, while taking measures to reduce the amazing debt levels of developing countries.
