World Bank President David Malpass walks during the official welcoming ceremony of G7 leaders and outreach guests at Schloss Elmau in Krün near Garmisch-Partenkirchen, Germany, Monday, June 27, 2022. (AP Photo/Markus Schreiber)
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UPDATED 2:00 PM PT – Monday, June 27, 2022
World Bank President David Malpass said the global economy will slow significantly due to high inflation, which will cause political problems in a number of countries. In an interview on Sunday, Malpass said the US and its allies must increase production of goods and services while keeping their economies open and not restricting international trade.
His comments followed anti-Russian sanctions earlier this year that caused problems in global energy, food and capital markets. He claimed the western world was facing an economic crisis.
“It’s a sharp slowdown, even in China,” he said. “We’ve seen global growth fall by half in terms of GDP growth since January, but there’s also bottlenecks, there’s inflation.”
Happy to speak to @POTUS @Joe Biden, @JPN_PMO @Kishida230, @10 Downing St @BorisJohnson, @CanadianPM @ Justin Trudeau & many other.
Thankful for @G7 countries strong support for the @World Bank Group as we work to help countries navigate intersecting global crises. [2/2] pic.twitter.com/O6oMBqaa3A
— David Malpass (@DavidMalpassWBG) June 27, 2022
Malpass argued that central banks should change their policies and regulations to encourage more production of anything that could alleviate hardship. He believes record inflation and shortages of key commodities like oil, fertilizer and wheat mean some countries will be “very difficult” to avoid a recession.
“It’s possible to produce enough to mitigate this crisis, but at the rate we’re moving, the fertilizer isn’t being made,” he explained. “A huge source of fertilizer is natural gas, which becomes the most useful fertilizer through the ammonium channel. It’s also used to create the electricity that turns the minerals into fertilizer, and that just doesn’t happen. Much of the world will be shut down for lack of fertilizer, and then these crop shortages will continue for several years.”
The President of the World Bank admitted that a US recession could not be ruled out, but did not contradict estimates that put the risk of a US recession at up to 50 percent.
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