World Bank chief David Malpass says Russia-Ukraine war could trigger global recession

Russian invasion of Ukraine might trigger a global recession given its impact on food and energy prices, and fertiliser supply amongst other things, warned World Bank President David Malpass. Speaking at the US Chamber of Commerce, he said that repercussions of the conflict are already being felt in many countries, including Europe’s largest economy Germany. 

“The war has an impact on food and energy prices as well as the availability of fertiliser supply,” Malpass said. "As we look at the global GDP ... it's hard right now to see how we avoid a recession," Malpass said without giving any specific forecast.

Malpass argued the economies of both Ukraine and Russia are expected to see a significant contraction, while Europe, China and the US were witnessing a slower growth. He further elaborated that developing countries were hit even harder with supply bottlenecks of fertiliser, food stocks and energy supplies. "The idea of energy prices doubling is enough to trigger a recession by itself," Malpass reckoned.

Russia-EU clash on gas supplies

Russian officials announced in April that natural gas supplies to EU and NATO members Poland and Bulgaria will be shut off due to the fact that both countries have offered significant support to Ukraine since the invasion began in late February. They refused to pay in rubles for items ordered in euros or other non-Russian currencies, according to the report. Furthermore, due to unpaid bills, Inter RAO, the Russian state-owned energy company, stopped supplying electricity to Finland on May 14. In the most recent development, Lithuania said that it will no longer receive gas, oil and electricity from Russia.

Russian economy continues to grow 

Amidst all this, Russian President Vladimir Putin claimed that his country's economy is "withstanding the blow" of global sanctions despite all the challenges. He made this statement while holding a meeting with his Belarusian counterpart Alexander Lukashenko in the Black Sea resort of Sochi on Monday, May 23. "The Russian economy withstands the blow of the sanctions, it withstands it very worthily. All the main macroeconomic indicators speak of this," Putin had stated, as per The Associated Press (AP). 

(Image: AP)