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Tag: David Malpass

  • Global recession warning as World Bank cuts economic forecast

    Global recession warning as World Bank cuts economic forecast

    World Bank President David Malpass
    Image caption, The World Bank, led by President David Malpass, says the economies of the US, Eurozone and China are all struggling

    The global economy is “perilously close to falling into recession”, according to the latest forecast from the World Bank.

    It expects the global economy to grow just 1.7% this year – a sharp decrease from the 3% it predicted in June.

    The report blames a number of factors stemming from Russia’s invasion of Ukraine and the impact of the pandemic.

    The impacts of higher interest rates are picked out as the key challenge for policy makers to overcome.

    World Bank president David Malpass said the downturn would be “broad-based” and growth in people’s earnings in almost every part of the world would “be slower than it was during the decade before Covid-19”.

    The 1.7% growth figure would be the lowest since 1991, with the exceptions of the recessions of 2009 and 2020, which were caused by the global financial crisis and the Covid pandemic.

    Growth in the world’s richest economies is likely to continue its sharp slowdown from 5.3% in post-pandemic 2021 to 2.5% in 2022 and just 0.5% this year.

    “Over the past two decades, slowdowns of this scale have foreshadowed a global recession,” the bank warned, adding that it anticipated “a sharp, long-lasting slowdown”.

    If a global recession were to occur, it would be the first time since the 1930s that there have been two global recessions within the same decade.

    woman shopping for fruit
    Image caption, Economic growth is being stunted by inflation, which has been driven higher by food and energy prices in many countries

    The US, the Eurozone and China are the three most influential parts of the world for economic growth, however the report said they were “all undergoing a period of pronounced weakness”. It said that was making the problems faced by other, poorer, countries, worse.

    Tackling rising prices

    Higher inflation is one of the main reasons that global economic growth is struggling. It has led to interest rate increases in dozens of countries that have further slowed growth.

    The aim is to tackle the cost-of-living crisis that millions are suffering, but it has also stifled business investments, and the report warned that more companies were struggling with their debts.

    Food and energy have been two of the biggest contributors to inflation, which could become more “persistent”. Media caption,

    Why are things so expensive? The BBC’s Faisal Islam answers your inflation questions in 90 seconds

    The World Bank said it expected the global pace of price rises to slow from 7.6% to 5.2% this year. However, that would remain significantly higher than the 2% rate many central banks work towards.

    Central banks including the US Federal Reserve and the Bank of England are trying to navigate a delicate path to curb inflation while not tipping their economies into recession.

    chart showing global interest rates

    Energy prices are “expected to ease” in 2023, the Bank said, thanks to an increase in global production and less demand in Europe, where an energy crisis has led businesses and households to reduce their use of gas.

    But it warned that some “prices spikes are possible”.

    Crop prices are forecast to fall 5% this year but they will still be significantly higher than they were a few years ago, having risen by 13% in 2022.

    Source: Ghanaweb

  • Ghana should have signed up for Debt Service Suspension Initiative – World Bank President

    The World Bank Group President, David Malpass, has expressed disappointment over Ghana and Nigeria’s decision not to sign up for the Debt Service Suspension Initiative (DSSI).

    Established in May 2020, the DSSI expired at the end of December 2021.

    The DSSI, put together by the International Monetary Fund (IMF) and World Bank offered countries an opportunity to freeze debt servicing, whiles they concentrate on using their minimum funds to deal with other commitments.

    Mr. Malpass was responding to questions at a programme in Washington DC, on suggestions that the Bretton Wood institutions are not doing enough to help cancel the debts of some African countries in distress.

    But reacting to the question, he pointed out that Ghana and Nigeria failed to apply for the DSSI, which would have provided some financial space for the repayment of loans.

    “Kristalina (IMF Boss) and I were talking yesterday with the Group about the Common Framework. If countries could have a situation where the common framework clause allow the country to have a standstill on debt, that would help the country choose their path forward on debts restructuring. That would mean they would get a break on debt repayment while they work on debt restructuring,” he explained.

    Mr. Malpass stated that such initiatives are designed to help reduce the impact of economic hardship on developing countries.

    He, however pointed out that some developing countries refused to take advantage of the initiative to minimise the impact of the current global hardship on their citizens.

    “Nigeria and Ghana both, did not ask for the common framework treatment”, he said, adding that the situation has made it difficult for such countries to overcome the negative impact of current global economic hardship on trade and currencies of developing countries.

    Debt to GDP to hit 90.7% – IMF

    The International Monetary Fund (IMF) had already projected that Ghana will end 2022 with a debt-to-Gross Domestic Product of 90.7%.

    This was captured in its Fiscal Outlook Report released on the sidelines of the on-going IMF/World Bank Annual meetings in Washington DC, USA.

    The report, also forecasts that the debt–to-GDP could reduce to 87.8% in 2023.

    According to the IMF, revenue expressed as a ratio of GDP could also hit 14.1% at the end of 2022.

    It will subsequently increase to 14.7% in 2023 and 15.4% in 2024”, the report said, classifying Ghana as a Low Income Developing Country.

     

  • Possible global recession looms – World Bank and IMF warn

    At the beginning of their annual meetings on Monday in Washington, the International Monetary Fund (IMF) and the World Bank issued a warning about a potential global recession.

    According to World Bank President David Malpass, economic growth in Europe’s industrialized nations is decreasing.

    He said currency depreciation was a concern for low-income countries, where the debt burden was expanding, in reference to the dollar’s recent climb.

    According to Malpass, the increase in interest rates added to the strain on these nations, and inflation continued to be a serious issue for everyone, but especially the poor.

    IMF Managing Director Kristalina Georgieva noted slowing economies in all three of the world’s major economic zones. She pointed to increased energy prices as a problem for the eurozone and to outbreaks of the coronavirus pandemic in China as a persistent cause of supply chain problems.

    While the labour market in the United States remained strong, jobs growth was slowing in response to interest rate increases imposed by the Federal Reserve.

    On Tuesday, the IMF is to present its latest forecasts for the global economy. Georgieva has announced that the growth prediction will be reduced again.

    She pointed to factors such as the pandemic, the Russian invasion of Ukraine and climatic disasters on all continents as creating problematic situations.

    For the first time since 2019, the meeting is taking place in a single location, with gatherings over recent years being in hybrid format.

    The meeting brings together finance ministers and representatives of banking and development aid, as well as central bankers.

  • World Bank chief says coronavirus pandemic widening inequality gap

    World Bank President David Malpass said on Wednesday that the coronavirus pandemic was exacerbating inequality throughout the world by hitting hardest those without a social safety net in developing countries while central bank asset purchases in advanced countries benefit the richest.

    Malpass told a webcast event hosted by the Council of the Americas the coronavirus pandemic was a “catastrophe” for the developing world that would bring long-term damage and global economic output would not recover to its pre-pandemic level for years.

    Source: reuters.com