Malpass: It Will Be Difficult to Avoid a Global Recession

World Bank President David Malpass warned that the Russian invasion of Ukraine could trigger a global recession due to the spike in food, energy, and fertilizer prices, and he is also concerned about the slowdown in China’s economic growth, British media report.

Malpass stated at a business conference on Wednesday that it will be difficult to "avoid a recession," according to the BBC. He also mentioned that 'lockdowns' of several cities due to the coronavirus in China are increasing concerns about the slowdown.

His comments are the latest in a series of warnings about the growing risk of a decline in activity in the global economy.

– If we look at global GDP… it is now difficult to expect that we will avoid a recession – Malpass said, without providing specific estimates, adding that merely doubling energy prices is enough to trigger a recession.

The World Bank last month revised its estimate for global economic growth this year downwards by nearly a full percentage point, to 3.2 percent.

Malpass also stated that many European countries still rely too heavily on Russia for oil and gas, while Western countries are pushing plans to reduce dependence on Russian energy.

At a virtual conference of the American Chamber of Commerce, Malpass also warned that Russia’s moves to reduce gas supply could trigger "significant slowdown" in the region.

Higher energy prices are already burdening Germany, the largest economy in Europe and the fourth largest in the world, he noted, adding that developing countries are simultaneously struggling with shortages of fertilizer, food, and energy.

He expressed concern about 'lockdowns' due to COVID-19 in some of China’s largest cities, including the financial, manufacturing, and shipping hub of Shanghai, which is slowing global economic growth.

– China has already faced a certain crisis in the real estate market, so the estimate for Chinese economic growth for 2022 has been significantly reduced even before the Russian invasion –  Malpass said.

On Wednesday, Chinese Premier Li Keqiang stated that the world’s second-largest economy has been hit harder by the latest round of quarantines than it was at the beginning of the pandemic in 2020. He called on Chinese officials to take additional measures to restart factories after 'lockdowns,' noting that progress is not satisfactory.

– Some provinces report only 30 percent of reopened businesses … the ratio must be raised to 80 percent in a short period –  he said. 

Complete or partial lockdowns were imposed in March and April in dozens of Chinese cities, including Shanghai, and these measures have caused a sharp slowdown in economic activity across the country. In recent weeks, official figures show that large parts of the economy, from manufacturing to trade, have been affected.