Russia’s invasion of Ukraine could cause a global recession as the price of food, energy and fertilizer jump, the head of the World Bank David Malpass said.
“As we look at global GDP… it’s hard right now to see how we avoid a recession. The idea of energy prices doubling is enough to trigger a recession by itself,” Malpass said to Reuters. He did not give details on when it might begin.
Last month, the World Bank cut its global economic growth forecast for 2022 by almost a full percentage point, to 3.2%.
Participating in a virtual event organized by the U.S. Chamber of Commerce in Davos, Malpass also said that many European countries were still too dependent on Russia for oil and gas. If Russia is cutting further gas supply to European countries, it could cause a substantial slowdown in the region.
Malpass also raised concerns about the ongoing lockdowns in some of China’s major cities which he said are still having ramifications or slowdown impacts on the world.
“China was already going through some contraction of real estate, so the forecast of China’s growth before Russia’s invasion had already softened substantially for 2022,” he said.
The head of the World Bank said that while Ukraine and Russia would likely see significant contractions, Europe, and the U.S. will see slower growth.