The World Bank says the recession will be “difficult to avoid” for many countries

JPMorgan Chase (JPM) CEO Jamie Dimon mentioned an economic “hurricane” on the horizon last week, while Tesla’s Elon Musk (TSLA) said he had a “super bad feeling” about the economy.

The causes of gloom? Malpas said in the latest World Bank forecast on Tuesday that “the war in Ukraine, the blockade in China, supply disruptions and the risk of stagflation are hitting growth.”

Stagflation, a combination of stagnant economic growth and high inflation, has become a major concern recently. The trend is reminiscent of experts and older consumers since the late 1970s, when the oil shock and slow economy led to two downturns, the so-called double-dip recession, in the early 1980s.

Investors are nervous that the Federal Reserve is aggressively raising interest rates to try to reduce rising prices. The problem, however, is that some fear the Fed is late in launching its anti-inflation campaign. As a result, the central bank may cause a recession as it is quick to catch up with even higher interest rates.

The prospect of higher short-term interest rates from the Fed has already led to a jump in the yield on long-term government bonds this year. Mortgage rates have also jumped, raising concerns that the housing market could slow dramatically.

Businesses are also struggling with higher commodity and wage costs and now have to contend with higher interest rates, which could potentially harm their end results.

Add all this and you will easily understand why the World Bank is getting more and more nervous. The International Credit Organization now expects the global economy to grow at an annual rate of just 2.9% this year. This is sharply lower than the growth rate of 5.7% last year, as well as the World Bank’s January 2022 forecast of 4.1%.

“The recovery from stagflation in the 1970s required a sharp rise in interest rates in large developed economies, which played an important role in triggering a series of financial crises in emerging markets and emerging economies,” the new forecast said. The World Bank.

The World Bank does not expect a major recovery soon. It says global growth should “hover” around 2.9% for both next year and 2024, describing the next few years as “a long period of weak growth and rising inflation”.