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:
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:
“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.
Ontario premier Ford vows to rebuild economy, unveils new Cabinet – Reuters.com
OTTAWA, June 24 (Reuters) – Doug Ford took the oath of office for a second term as the premier of Canada’s most populous province on Friday with a promise to build highways and homes, and rebuild Ontario’s economy.
Ford’s right-leaning Progressive Conservatives returned to power with a sweeping victory in a provincial election on June 2, winning 83 seats in the 124-seat legislature.
He unveiled a larger 30-member Cabinet, moving former solicitor general Sylvia Jones to role of minister of health and deputy premier, while keeping Peter Bethlenfalvy in post as the debt-laden province’s finance minister.
Ford said he had an “ambitious plan” for his second stint, as his government faced challenges posed by inflation rates hitting a nearly 40-year high in Canada.
“That plan starts with rebuilding Ontario’s economy,” Ford said at his swearing-in ceremony.
He reiterated pledges made in the lead-up to the election, including new spending on highways, transit and the auto sector.
“We’re investing to connect every part of our auto supply chain … the cars of the future will be built right here, Ontario, from start to finish,” Ford said.
Ontario, home to just under 40% of Canada’s 38.2 million people, is Canada’s manufacturing heartland. It is also one of the world’s largest sub-sovereign borrowers, with publicly held debt in excess of C$400 billion ($309.6 billion).
Ford also pledged to address soaring home prices in the province by building more affordable housing.
Canada’s national housing agency projects Ontario to be one of the worst affected by a housing shortage over the next decade. Provincial capital Toronto is already one of the most expensive cities to live in globally.
“Too many families are frozen out of the housing market … we need to build more attainable homes,” Ford said.
($1 = 1.2921 Canadian dollars)
(This story was refiled to fix typo in headline)
Reporting by Ismail Shakil in Ottawa
Our Standards: The Thomson Reuters Trust Principles.
Northern Shootout's return provides a big boost to Orillia's economy – CTV News Barrie
The return of an annual slo-pitch softball event marks the unofficial start of summer in Orillia.
The Northern Shootout is back for its 13 edition after a pandemic-driven hiatus.
The tournament consists of 78 men’s, women’s and co-ed teams from Ontario and Quebec and promises a big boost to the economy in the city.
“Especially after two years of pandemic restrictions,” said Mike Ladouceur, City of Orillia. “This helps our tourism recover, puts heads in beds, hotels are filled, restaurants filled, this is really the big event that begins our summer of events.”
Organizer Mike Borrelli said the tournament has grown to become one of the biggest in Canada.
“We’re pretty much at capacity for participants. We can’t accommodate anymore,” he added. “We’re using the other diamonds, we got all the diamonds in Orillia, and we’re using the Rama diamond, so if we had more diamonds, we could accommodate more teams.”
The owners of Adovo Pizza in Orillia say the increase in tourism has done wonders for their business this year.
This being the first big event of the season, they’re excited to welcome so many people into the city.
“Everyone has just been waiting to get out,” said Adam Zimmerman, co-owner. “Especially for sporting events and vendors, have a cold beer. There’s nothing wrong with it.”
The tournament culminates with an annual home run derby, which organizers said typically draws 1,200 fans to watch.
Sixteen participants will compete to walk away with a championship belt.
Toronto Mayor John Tory lays out vision for city's economy in speech – CP24 Toronto's Breaking News
Toronto Mayor John Tory says he’s optimistic about the future of the city’s economy, but is acknowledging that continued recovery from the COVID-19 pandemic will take place in a “challenging” economic period.
In a speech to the Toronto Region Board of Trade Thursday, Tory said he sees the city’s economic recovery and future growth resting on five pillars; rebuilding and instilling confidence, attracting new business and expanding existing ones, supporting businesses with an emphasis on small business, supporting growth, and being ready for the future and possible “transformational change.”
Tory said there is “always a tomorrow” following a crisis, but making it brighter requires planning.
“That’s why I have been talking a lot about the city’s recovery from the pandemic, a recovery that will take place during challenging economic times,” the mayor said. “I am completely committed to making sure Toronto comes back stronger than ever and that will be my main focus in the weeks and months ahead.”
To that end, Tory said he will be assembling a volunteer panel of accomplished leaders to help provide “real-time advice” as the city continues to reopen following more than two years of COVID-19 restrictions.
“I believe the rapid pace of change and need to adapt will continue and I will rely on this group to help provide real-time advice and insight so we can remain nimble,” Tory said.
While the mayor did not go into detail about the city’s economic challenges, Toronto is facing a number of hurdles. The city is still facing a major budgetary shortfall as a result of shrunken revenues. While the TTC used to be jam-packed on a daily basis, ridership numbers have still not returned to normal and ridership patterns have become more unpredictable as many businesses have allowed their employees to work from home for at least part of the week. It is also not yet clear how rising interest rates and inflation will affect the local economy in the coming months.
“Successfully addressing the issues we face as a city will take everything we’ve got,” Tory said in his speech, acknowledging that the pandemic hurt people and businesses.
“I am committed to making sure those who have lost so much over the last two years get the support they need and can be confident in playing a full and satisfying role in a strong recovery,” he added.
He said the future of work remains a key question tied to the city’s recovery and said the panel will be examining that as one of its key issues.
“This is a very profound question with potentially very profound consequences depending on the answer so we must get the very best answer we can from our advisors and from you,” Tory told the board in his speech.
He said that for example, just having people work from home on Mondays and Fridays can hugely impact the TTC and its revenues.
“What that means is a huge revenue shortfall for the transit system, because the cost of running the system for Tuesday, Wednesday, Thursday, and for the people who do go to work Monday and Friday stays about the same, (even if) you can make some changes around the edges,” Tory said. “And that creates a huge problem for us. So that’s just one small example of the kinds of questions that we have to answer.”
Tory also touted the city’s success and highlighted recent investments by the film and pharmaceutical industries from companies such as Netflix and Sanofi Pasteur. He said he would like to see those successes replicated in other industries as well.
“The world has taken notice of the growth and success story that is Toronto,” Tory said. “It was a constant conversation in the halls of the Collision conference. But at the same time, Toronto and all cities are facing challenging times ahead.”
More details about what work the advisory panel will do and who will sit on it are expected to be announced in the coming weeks.
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