World Bank's Malpass, IMF's Georgieva See Rising Risks of Global Recession

World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP
World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP
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World Bank's Malpass, IMF's Georgieva See Rising Risks of Global Recession

World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP
World Bank President David Malpass speaks at the Stanford Institute for Economic Policy Research (SIEPR) on September 28, 2022 in Stanford, California. (Getty Images/AFP

World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said inflation remained a continuing problem after Russia's invasion of Ukraine.

"There's a risk and real danger of a world recession next year," Malpass said in a dialogue with Georgieva at the start of the first in-person meetings of the two institutions since the COVID-19 pandemic.

He cited slowing growth in advanced economies and currency depreciation in many developing countries, as well as ongoing inflation concerns.

The IMF chief last week said the global lender would downgrade its forecast for 2.9% global growth in 2023 when it releases its World Economic Outlook on Tuesday, citing the shocks caused by the COVID-19 pandemic, Russia's invasion of Ukraine and climate disasters on all continents.

On Monday, she noted that economic activity is slowing down in all three major economies - Europe, which has been hit hard by high natural gas prices, China, where housing volatility and COVID-19 disruptions are dragging down growth, and the United States, where interest rate hikes "are starting to bite."

Slowing growth in advanced economies, rising interest rates, climate risks and continuing high food and energy prices are hitting developing countries particularly hard, both leaders said, calling for concerted action to help emerging markets.

Georgieva, the first IMF chief from an emerging market economy, said advanced economies needed to "get the big, scary danger of debt crisis under control" because it would affect all countries, not just those with high debt burdens.

"Not the rosy picture. But if we joined forces, if we act together, we can reduce the pain that is ahead of us in 2023."

Georgieva said the IMF will be advocating this week for central banks to continue their efforts to contain inflation, despite the negative impact on growth.

If they don't do enough, she said, "we are in trouble. ... We cannot afford inflation to be a runaway train."

Fiscal measures should be "well targeted" to ensure they did not add more "fuel to the flames of inflation."

Malpass, who came under fire last month for declining to say whether he accepts the scientific consensus on global warming, said officials at the bank were working hard to free up more funds to address climate problems facing so many developing countries.

Georgieva said the world needed a staggering $3 to $6 trillion to address climate change and it was essential to increase collaboration with the private sector and leverage funds "on scale" to help meet the needs.



Oil up 1% on Mideast Risks, China Stimulus

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil up 1% on Mideast Risks, China Stimulus

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices rose more than 1% on Tuesday to their highest levels since the beginning of the month, supported by instability in the Middle East and China's plans for more economic stimulus.

Brent futures climbed 84 cents, or 1.2%, to $71.91 a barrel by 0911 GMT, while US West Texas Intermediate crude futures also rose 84 cents, 1.2%, to $68.42.

Oil prices gained support from President Donald Trump's vow to continue the US assault on Yemen's Houthis unless they end their attacks on ships in the Red Sea. Trump said on Monday he would hold Iran responsible for any attacks carried out by the Houthi group that it backs in Yemen.

Meanwhile, Israeli airstrikes in Gaza killed at least 200 people, Palestinian health authorities said, as attacks on Tuesday ended a weeks-long standoff over extending a ceasefire that halted fighting in January, Reuters reported.

"Along with US strikes on the Houthis in Yemen, several factors provided support to the market," ING analysts said in a research note.

"China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected."

The state council, or cabinet, unveiled on Sunday a special action plan to boost domestic consumption, with measures such as increasing incomes and offering childcare subsidies.

Crude oil throughput in China, the world's biggest crude importer, rose 2.1% in January and February from a year earlier, supported by a new refinery and Lunar New Year holiday travel, official data showed on Monday.

The OECD said on Monday that Trump's tariffs would drag down growth in the United States, Canada and Mexico, and weigh on global energy demand.

"With global supply surging and tariffs and trade wars set to hit global demand, we remain of the view that prices will head lower and eventually reach the mid $60s," said Robert Rennie, head of commodity and carbon strategy at Westpac.

Further adding to global supply, Venezuela's state-run PDVSA has put together three operational scenarios indicating it plans to continue producing and exporting oil from its joint venture with Chevron after the US major's licence expires next month, according to a company document reviewed by Reuters on Monday.

Talks on Tuesday between Trump and Russian President Vladimir Putin about ending the Ukraine war were also in focus.

Markets believe a potential peace negotiation would involve the easing of sanctions on Russia and the return of its crude supply to global markets, weighing on prices.