The World Bank is reducing its global growth forecast for 2022 by nearly a full percentage point, to 3.2% from 4.1%, due to the impacts of Russia’s invasion of Ukraine, World Bank President David Malpass said on Monday.

The global recovery is set to decelerate amid continued COVID-19 flare-ups, diminished policy support, and lingering supply bottlenecks. The outlook is clouded by various downside risks, including new virus variants, unanchored inflation expectations, and financial stress.

If some countries eventually require debt restructuring, the recovery will be more difficult to achieve than in the past. Climate change may increase commodity price volatility.

Social tensions may heighten as a result of the increase in inequality caused by the pandemic. These challenges underscore the need to foster widespread vaccination, enhance debt sustainability, tackle climate change and inequality, and diversify economic activity.

In his Foreword, World Bank Group President David Malpass reëects on both encouraging and troubling economic developments, clouded by many risks and considerable uncertainty and notes, “Against this mix of encouraging and troubling news, it is clear that challenging times lie ahead for the global economy—and particularly for developing countries—as economic stimulus slows and credit conditions tighten. Putting more countries on a favourable growth path will require concerted international action and a comprehensive set of national policy responses.”