(RepublicanInformer.com)- On Wednesday, the head of the World Bank Group offered a dire warning about the world’s financial future.
During a business event hosted by the US Chamber of Commerce, World Bank Group President David Malpass remarked that it was difficult to “see how we escape a recession.”
Several reasons contributed to Malpass’s gloomy prognosis, including coronavirus lockdowns in China, reliance on Russian oil and gas, fertilizer, food, and energy shortages in developing countries. As we look at the world’s Gross Domestic Product, Malpass said a recession is imminent.
GDP fell unexpectedly in April, contracting for the first time since the outbreak began.
Malpass said that the prospect of energy costs tripling is enough to spark a recession by itself. Malpass argued that several European countries, notably Germany, were overly reliant on Russia for oil and gas, presumably due to Russian President Vladimir Putin’s continuing conflict.
He also expressed serious worries about the continuous lockdowns in China’s main cities. The lockdowns in Shanghai, China’s financial, manufacturing, and shipping powerhouse, are still having repercussions. It’s slowing down the economic engine of the entire world.
Malpass said that the waves of Covid outbreaks resulted in lockdowns, significantly lowering China’s growth forecasts. China’s premier, Li Kequiang, said Wednesday that the newest round of lockdowns had impacted China, the world’s second-largest economy, much worse than they had in 2020.
According to Li Kequiang, the restrictions adopted by China have resulted in a dramatic slowdown in economic activity, with “just 30% of businesses reopening” in some areas.
The World Bank slashed global economic growth predictions for 2022 by about a full percentage point, to 3.2 percent. Malpass’s remarks echoed those of Bank of America and BlackRock President Rob Kapito earlier this month. They claimed that inflation is likely to lead to labor and raw material shortages.
The U.S. Treasury Secretary, Janet Yellen, said that “unanticipated and large shocks to the economy that have boosted energy and food prices, and supply bottlenecks that have affected our economy badly.”
She said that she didn’t fully understand the impact it could have at that time, but she “recognizes that now.”
That doesn’t inspire confidence, something needed to escape a recession that can often be psychologically driven.