World Bank President David Malpass said Sunday that the world economy is undergoing a “sharp slowdown” due to Russia’s invasion of Ukraine, and warned it will be difficult for some countries to avoid recession.
“We’ve seen the world growth fall by half since January, in terms of GDP growth,” Malpass said in an interview on CBS News’ “Face the Nation,” according to a transcript, adding that inflation and food shortages in poorer countries are exacerbating the problem.
When asked by host Margaret Brennan how to avoid a global recession, he replied: “Some countries, it’s going to be very hard to do that. I think that leadership from the stronger countries is very important.”
““The bottom line is, there needs to be lots more production, and that’s most available to the strongest countries. The U.S. is the world’s biggest economy and can increase production more than anybody else.””
Malpass said he would recommend the U.S. Federal Reserve focus less on rate hikes and more on regulatory policy, allowing banks to lend more and reducing bond portfolios — ideally so more money would be available for lending, and to go toward increasing production and strengthening supply chains.
He described one ripple effect, about how the shortage of natural gas is leading to a global food crisis: “A giant source of fertilizer is from natural gas through the ammonium channel, into the most useful fertilizer, and it also is used to make the electricity that converts the minerals into fertilizer. And that’s just not happening. So, a lot of the world is shutting down for lack of fertilizer.”
Malpass said “I don’t disagree” with Fed Chairman Jerome Powell’s warning last week that a U.S. recession was “certainly a possibility,” as well as a recent Fed assessment that inflation will take years to tame.
“It’s going to take time to come down,” Malpass said. “It’s going to take months and months, and maybe two years, to bring inflation back down.”