The World Bank has warned that the war in Ukraine will escalate food and fuel prices for the next three years, which could lead to high rates of inflation and fuelling fears that the world economy is headed for slow growth.
The Washington-based organisation has said that continual high costs of commodities could last till 2024 and lead to stagflation – sluggish activity and combined pressure of living costs. The World Bank in its latest Commodities Market Outlook report said the world faces the biggest commodity price shock since the 1970s, a Reuters report reads.
"Policymakers should take every opportunity to increase economic growth at home and avoid actions that bring harm to the global economy," said Indermit Gill, the World Bank's Vice President for Equitable Growth, Finance, and Institutions.
Owing to restrictions on the trade of food, fuel and fertiliser, the situation is being aggravated. It is escalating the already elevated inflationary pressures around the world. Russia and Ukraine together make for a third of the world's global wheat exports. Russia is the world's largest natural gas and fertiliser exporter, and the second-largest crude oil exporter.
Non-energy prices are expected to rise by 20 per cent in 2022, while fuel and energy prices are expected to rise by over 50 per cent in 2022 before easing in 2023 and 2024, as per the World Bank report. "In the event of a prolonged war, or additional (Western) sanctions on Russia, prices could be even higher and more volatile than currently projected," the report said.
