The World Bank has warned that a recession is all but certain, following a revision down of its world economic growth forecast. The grim statement comes after its outlook for growth was severely reduced, with economists downgrading a previous 4.1% forecast to 2.9% for the year.
The World Bank president, David Malpass painted a downcast picture in a statement on Tuesday in comments published in the new Global Economic Prospects report saying “The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid. Several years of above-average inflation and below-average growth are now likely, with potentially destabilising consequences for low- and middle-income economies. It’s a phenomenon – stagflation – that the world has not seen since the 1970s.”
Describing the current era as one of protracted “feeble growth” and elevated inflation, the World Bank says that we may find ourselves back in the same economic environment as the 70s, with Malpass adding, “The danger of stagflation is considerable today. Subdued growth will likely persist throughout the decade because of weak investment in most of the world.
“With inflation now running at multi-decade highs in many countries and supply expected to grow slowly, there is a risk that inflation will remain higher for longer. Even if a global recession is averted, the pain of stagflation could persist for several years – unless major supply increases are set in motion.”
In the wake of those comments, gold has trended upwards, with double digit price increases. In a show of strength from the bulls, gold prices hit a daily high of £1,481 ($1,854), with a £8.62 ($10.80) gain.
In times of recession, gold is the preferred safe store of wealth.
