World Economic Outlook, April 2022: War Sets Back The Global Recovery
World Economic Outlook, April 2022
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- Published: April 19, 2022
War slows recovery
- The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution.
- Economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation.
- Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest.
- Global growth projections:
- Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.
- This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January.
- Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term.
- Inflation projections and changes:
- 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January.
- Required actions:
- Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.
Global prospects and policies
- The war in Ukraine is expected to be a major factor in the significant slowdown of global growth in 2022.
- Country-specific impacts:
- A severe double-digit drop in GDP is expected in Ukraine due to fighting.
- A deep contraction is projected for Russia due to sanctions and European countries’ decisions to scale back energy imports.
- Transmission channels of economic costs:
- Commodity markets, trade, and—to a lesser extent—financial interlinkages.
- Distributional effects:
- Fuel and food price rises are already having a global impact, with vulnerable populations—particularly in low-income countries—most affected.
Private sector debt and the global recovery
- Context:
- Soon after the pandemic hit, exceptional measures were deployed to maintain private access to credit, staving off a deeper recession in 2020.
- These policies led to a surge in consumer and business indebtedness.
- Main findings:
- Aggregate private debt figures do not tell the whole story.
- The recovery could be weaker in some countries due to a variety of factors.
- Future monetary and fiscal tightening often have a larger effect on the most vulnerable.
- Policy implication:
- Careful attention will be needed when unwinding pandemic-era policy support.
A greener labor market: employment, policies, and economic transformation
- Findings from a sample of largely advanced economies:
- Both greener and more polluting jobs are concentrated among small subsets of workers.
- Individual workers face tough challenges in moving to greener jobs from more pollution-intensive jobs.
- Stronger environmental policies help green the labor market and appear more effective when reallocation incentives are not blunted.
- Policy simulation result:
- Model simulations suggest that a policy package incorporating a green infrastructure push, carbon prices, an earned income tax credit, and training, could put an economy on a path to net zero emissions by 2050 with an inclusive transition.
Global trade and value chains in the pandemic
- Observations:
- When COVID-19 hit, the combined supply and demand shock was expected to lead to a dramatic collapse in trade.
- Trade in goods bounced back quite rapidly, although trade in services still remains sluggish.
- Resilience and risks:
- Disruptions in key international networks of production and trade prompted calls to relocate production domestically.
- Pandemic-specific factors had a key role in the rotation of demand from services to goods.
- Significant negative spillover effects of pandemic containment policies on trade partners were short-lived, and trade and value chains proved resilient overall.
- Policy recommendations:
- To guard against future shocks, international production and trade networks can be strengthened by increasing diversification, and enhancing substitutability, in input sourcing.
Source: World Economic Outlook, April 2022: War Sets Back The Global Recovery
Content in this bundle
- Chapter 1 Annex
- Chapter 2
- Chapter 2 Annex
- Chapter 3
- Chapter 3 Annex
- CHAPTER 4 GLOBaL TRaDE aND vaLUE ChaINS DURING ThE PaNDEMIC
- Chapter 4 Annex
- WEO Chapter 4 Apr. 2022
- April 2022 WEO Chapter 1
- WEO Chapter 2 Apr 2022
- Executive Summary
- Foreword
- War Sets Back the Global Recovery, World Economic Outlook, Statistical Appendix, April 2022
- War Sets Back the Global Recovery, World Economic Outlook, Statistical Appendix, Table B, April 2022
- War Sets Back the Global Recovery, World Economic Outlook, Statistical Appendix, Table A, April 2022
- Full Report