Stagflation threatens global economy – Bloomberg

Photo: ERA

World economy threatened by stagflation due to war

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Finance ministers and central bankers of the G7 express their concern that stagflation can no longer be stopped.

The threat of stagflation is increasingly looming on the world economy. About it writes Bloomberg.

Finance ministers and central bankers of the G7 express their concern that stagflation can no longer be stopped.

“The war in Ukraine has additional consequences for the economy. This means higher inflation combined with a loss of momentum for recovery from the pandemic. We will have to discuss what we can do to avoid stagflation scenarios,” said German Finance Minister Christian Lindner.

It is reported that there is a harmful triple combination of rising inflation, slowing growth and rising unemployment, and “this is the worst-case scenario for central banks and lawmakers who will have to choose which disease to fight.”

“Higher food and energy prices are causing stagflationary effects, lowering production and spending and driving up inflation around the world,” Treasury Secretary Janet Yellen said.

The outlook for a global recession remains low, at least this year, but the pace of events is taking policymakers and investors by surprise as financial markets plunge and growth forecasts continue to be revised down.

Price increases in the UK are reported to have hit a 40-year high and Bank of England Governor Andrew Bailey has warned that rising food prices could have “apocalyptic” consequences for the world.

The publication also reports that the S&P 500 index fell 4% on May 18, which was the most significant one-day drop since 2020.

“The biggest shock comes from China, where analysts continue to cut their forecasts. Standard Chartered, Goldman Sachs Group and Citigroup cut their growth forecasts this week, as did Bloomberg Economics, which now sees growth of just 2% yoy year-over-year. with a forecast of 3.6%,” the publication says.

Previously, it was reported that alleconomic achievements of Ukraine over the past 18 years may be lost, if the Russian invasion drags on.

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