World Bank chief warns of recession risk in Europe

MOSCOW, 29 Sep — PRIME. The weakness of the euro and high inflation increase the risk of a recession in Europe, said the head of the World Bank, David Malpass.

“The weakness of the euro and high inflation increase the likelihood of a recession in Europe,” said Malpass, speaking at Stanford University. He also noted that the World Bank sees the risks of curbing the growth of the European economy for a long period of time.

On Wednesday, Deputy Chairman of the Bank of Russia Alexei Zabotkin said that the Eurozone and the European Union have already entered or are entering a recession.

On Monday, the head of the European Central Bank, Christine Lagarde, said that eurozone GDP is likely to decline in the fourth quarter of 2022 and the first quarter of 2023. Lagarde recalled that in the ECB’s baseline scenario, eurozone GDP is expected to grow by 0.9% next year, while in the unfavorable scenario, some of the elements of which have already been implemented since the time of compilation, a recession of 0.9% is expected.

At the same time, David Malpass warned that it would take years to diversify global energy production away from Russia.

“Under current policies, it will take years for global energy production to diversify (supply) away from Russia,” he said. The broadcast was conducted on the website of the World Bank.

According to the head of the international organization, this will become a factor in “a longer risk of stagflation” (stagflation is a situation where an economic downturn and high unemployment are accompanied by rising prices).

At the same time, according to Malpass, the World Bank sent $11 billion to support Ukraine.

“About $11 billion has already been made available (to Kyiv) through our projects and trust funds,” Malpass said at a conference at Stanford University.

He also noted that, in total, the World Bank “mobilized” about 13 billion dollars of emergency assistance to Ukraine through multilateral channels.