The World Bank cut its forecast for global growth to just under 3% as inflation persists and spending slows.

They are now warning that potentially years of below-average growth and above-average inflation can destabilize low and middle-income countries. It is expected to keep such pace over the next two years, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn.

The war in Ukraine has upended the fragile global recovery, triggering a devastating humanitarian crisis in Europe, pushing up food and commodity prices, slowing growth globally, and exacerbating inflationary pressures worldwide. Geopolitical and economic uncertainties are dampening business confidence and investment and further weakening short-term economic prospects. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5% below its pre-pandemic trend.

Looking forward, it is urgent to encourage production and avoid trade restrictions. According to World Bank President David Malpass, changes in fiscal, monetary, climate, and debt policy are needed to counter capital misallocation and inequality.

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