Economic growth will slow down, inflation will rise, debt will increase.
The World Bank in its latest report predicts that the war in Ukraine and sanctions against Russia will hit the world economies hard.
From last year’s projections of 3.7% growth, now the bank forecasts GDP growth of 2.7%. If the war continues – projections will deteriorate, external demand will decline, commodity and energy prices will rise, investment will be delayed.
“This scenario would result in even lower growth and lower revenues, as well as increased demands for fiscal support and an increase in funding costs,” the report said.
According to the World Bank, inflation will reach 5.5% this year. Prices will continue to rise, the cost of living will be higher, and the poorest will be hit hardest.
Public debt will also increase, which would reach 62%, and in the next 2 years will exceed 64% of GDP.
The recommendations are for the Government to be careful – especially with fiscal transfers, misused subsidies, wide tax exemptions, frequent changes in pension policy with fiscal implications that are unsustainable and can disrupt macroeconomic stability. Caution is also needed in public finances.
The World Bank has bad forecasts for all countries, and the most dramatic are for Ukraine, whose economy will be halved, ie GDP will be reduced by 45%.
The overall economy in Europe and Central Asia will grow by 4.1%, which is twice less than the recession after the coron pandemic.