A protracted period of feeble growth and elevated inflation. That was the World Bank's sobering prognosis for the world economy in its report on Global Economic Prospects released this week. The bank slashed its growth forecast for 2022 by almost one-third, to 2.9 per cent, from 4.1 per cent as recently as January. In April, the International Monetary Fund also cut its forecast to 3.6 per cent, from 4.4 per cent in January. It is unusual for these institutions to make such drastic revisions in their economic projections within one quarter. What this reflects is that the impact of Russia's war on Ukraine, particularly on oil and food prices, is likely to be severe and prolonged, adding to pre-existing inflationary pressures.

Coupled with continued supply chain disruptions, this is prompting central bank policy actions that will erode consumption and slow growth. As World Bank president David Malpass warned, the risk of stagflation - a recession combined with high inflation - is rising. Also, many developing countries are vulnerable to food crises comparable in severity to what happened in 2007, and to debt distress as interest rates rise, the US dollar remains firm and growth slows.