The World Bank has sharply downgraded its outlook for the global economy, pointing to Russia’s war against Ukraine, the prospect of widespread food shortages and concerns about the potential return of “stagflation” — a toxic mix of high inflation and sluggish growth unseen for more than four decades.
The 189-country anti-poverty agency predicted Tuesday that the world economy will expand 2.9 per cent this year. That would be down from 5.7 per cent global growth in 2021 and from the 4.1 per cent it had forecast for 2022 back in January.
“For many countries, recession will be hard to avoid,” said David Malpass, the World Bank’s president.
The agency doesn’t foresee a much brighter picture in 2023 and 2024: It predicts just three per cent global growth for both years.
For the United States alone, the World Bank has slashed its growth forecast to 2.5 per cent this year from 5.7 per cent in 2021 and from the 3.7 per cent it had forecast in January. For the 19 European countries that share the euro currency, it downgraded the growth outlook to 2.5 per cent this year from 5.4 per cent last year and from the 4.2 per cent it had expected in January.
In China, the world’s second-biggest economy after the United States, the World Bank expects growth to slow to 4.3 per cent from 8.1 per cent last year. China’s zero-COVID policies, involving draconian lockdowns in Shanghai and other cities, brought economic life to a standstill. The Chinese government is providing aid to ease the economic pain.
Emerging market and developing economies are collectively forecast to grow 3.4 per cent this year, decelerating from a 6.6 per cent pace in 2021.
WATCH | Food banks brace as rising inflation pushes need:
Food banks brace for summer of hunger
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War in Ukraine disrupts trade
Russia’s invasion of Ukraine has severely disrupted global trade in energy and wheat, battering a global economy that had been recovering robustly from the coronavirus pandemic. Already-high commodity prices have gone even higher as a result, threatening the availability of affordable food in poor countries.
“There’s a severe risk of malnutrition and of deepening hunger and even of famine,” Malpass warned.
The World Bank expects oil prices to surge 42 per cent this year and for non-energy commodity prices to climb nearly 18 per cent. But it foresees oil and other commodity prices both dropping eight per cent in 2023. It likened the current spike in energy and food prices to the oil shocks of the 1970s.
WATCH | War in Ukraine halts grain exports:
Ukraine grain exports obstructed by Russian invasion
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Duration 2:32
More than 20 million tonnes of harvested Ukrainian grain is stuck inside the country because of Russia’s blockade of major ports.
“Additional adverse shocks,” the agency warned in its new Global Economic Prospects report, “will increase the possibility that the global economy will experience a period of stagflation reminiscent of the 1970s.”
The prospect of stagflation poses a dilemma for the Federal Reserve and other central banks: If they continue to raise interest rates to combat inflation, they risk causing a recession. But if they try to stimulate their economies, they risk driving prices higher and making inflation an even more intractable problem.
The World Bank noted that the previous period of stagflation required rate increases so steep that they tipped the world into recession and led to a series of financial crises in the poor countries of the developing world.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
