World Bank warns a global recession looks inevitable as food and energy prices spiral

• Food, energy, and fertilizer prices have soared since Russia invaded Ukraine.
• The commodities surge could lead to negative GDP growth, according to World Bank president David Malpass.

Russia's invasion of Ukraine has caused commodity prices to rise to such an extent that a global recession may now be inevitable, according to the president of the World Bank.

"As we look at the global GDP ... it's hard right now to see how we avoid a recession," David Malpass told the US Chamber of Commerce on Wednesday, according to a Reuters report.

"The idea of energy prices doubling is enough to trigger a recession by itself."

Malpass pointed to the negative impact from soaring food, energy, and fertilizer prices, in particular. Crude oil prices have risen 20% to $111 a barrel since Russia attacked Ukraine in late February.

Gas prices have soared so high in the US that demand for gasoline is dropping just as the summer driving season is about to begin. Earlier in the year, President Joe Biden warned that Americans will likely feel "Putin's price hike" at the gas pump for the foreseeable future.

Ground beef, sunflower oil, and wheat have all surged in price, with analysts predicting a prolonged period of food inflation. Meanwhile, the Green Markets North America fertilizer price index — which tracks the costs of urea, potash, and diammonium phosphate — has risen 14% since Russia's assault on Ukraine began.

Commodity price rises can lead to a recession because they help drive up inflation, which has hit 8.3% in the US and is running at similar 40-year highs in the UK. Central banks will tend to hike interest rates to curb inflation, which hits economic growth.

Malpass noted that developing countries were most likely to be plunged into recession by soaring food, energy, and fertilizer prices.

"It's a very difficult, challenging outlook for advanced economies, but even worse for developing countries," he said.

The World Bank cut its 2022 global growth forecast from 4.1% to 3.2% in April, citing the impact of Russia's invasion on gross domestic product.

"Countries are under severe financial stress," Malpass said at the time. "Sixty percent of low-income countries are already in debt distress or at high risk of it."

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