The Washington Institution strongly revives its growth forecast for 2022, from 4.1 % anticipated in January to 2.9 %, and fears a period of economic stagnation combined with high inflation.
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War in Ukraine, rampant inflation, supply problems because of the COVVI-19, partial withdrawal of public aid implemented during the pandemic … The World Bank describes an economic storm on all fronts in its biennial report on the ‘State of the economy, published Tuesday, June 7. It therefore very strongly revives its forecast for global growth for 2022, from 4.1 % anticipated in January to 2.9 %.
Above all, she fears that this violent brake stroke is durable, with a possible return from stagflation, or a period of economic stagnation combined with high inflation. “Even if a global recession is avoided, the pain of stagflation could persist for several years, unless a major improvement on the side of supply problems is not put in place. (…) Several years of inflation above The long -term and growth trend below the trend are now likely, with potentially destabilizing consequences for countries with weak and medium income. It is a phenomenon [stagflation] that the world has not known since 1970s. “
The current shock, a sort of perfect storm, is major, underlines the institution of Washington. In 2021, global growth was exceptional, at 5.7 %, following the artificial rebound caused by the (almost) end of the health crisis. In 2022, it should be reduced by half, to 2.9 %. In the short term, the euro zone and the United States must experience this year an increase in its similar gross domestic product (2.6 % and 2.5 %), but the first should win in 2023 compared to the latter (1, 9 % against 2.4 %).
The war in Ukraine makes the euro zone more fragile, insofar as it depends much more on Russian gas. In addition, it is more affected by supply problems on logistics chains. Ukraine produces, for example, certain automotive parts whose manufacturing is strongly reduced, which causes certain factories to be stopped within the European Union. However, the most fragile economies remain emerging countries. Thus, according to the World Bank, growth should reach 3.4 % in 2022, compared to 6.6 % in 2021.
Avoid oil and energy subsidies
The parallels with the 1970s are striking. The rise in the oil price observed for two years is the strongest since the shock of 1973. In addition, all energies are affected: oil, gas, coal, as well as all petroleum products, which was not The case fifty years ago. “There is less room for maneuver to substitute [black gold] another alternative fossil energy,” it is indicated in the report. The consequence is global inflation which, in April, was 7.8 %, of unheard of since 2008. For developed countries, it has been the highest since 1982. The impact will be almost mechanical, with a reduction global growth of 0.8 points, only because of the prices outburst.
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