The World Bank has warned the hopes of averting recession for all countries will fade the longer the war in Ukraine continues.
World Bank president David Malpass said for many countries "recession will be hard to avoid."
The agency has now predicted the world economy will expand 2.9 per cent this year, but that's down on the 4.1 per cent it had forecast back in January.
The sharp downgrade for the world's economy is also based on the potential return of "stagflation" — a toxic mix of high inflation and sluggish growth unseen for more than four decades.
Ayhan Kose, director of the Prospects Group at the World Bank, said geopolitical tension, combined with interest rates rising and COVID disruptions, could create a "perfect storm".
"When you put the three of them together, if those three risks materialise, we can easily find ourselves in the midst of a perfect storm," Mr Kose said.
"That type of storm will push the growth rate this year to 2 per cent and next year, at the global level, 1.5 per cent.
The agency doesn't foresee a much brighter picture in 2023 and 2024: It predicts just 3 per cent global growth for both years.
Global growth rates in 2021 were 5.7 per cent, despite the pandemic raging.
The agency also predicted economies around the world will experience sharp deceleration, twice the rate seen in the late 1970s.
Mr Malpass said between 2021 and 2024, the pace of global growth is projected to slow by 2.7 per cent, more than twice the deceleration seen between 1976 and 1979.
The agency warned in its new Global Economic Prospects report that "additional adverse shocks" would "increase the possibility that the global economy will experience a period of stagflation reminiscent of the 1970s."
The World Bank noted that the previous period of stagflation required rate increases so steep that they tipped the world into recession and led to a series of financial crises in the poor countries of the developing world.
ABC/wires
