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The World Bank’s most recent Commodity Market Outlooks report assesses the potential impact of the war in Ukraine in both the short and medium terms. Bank president David Malpass expects energy prices to increase by 50% this year, while wheat prices climb 40%. He is concerned about the impact on poorer nations that are already under strain. World Bank officials have some concerns about the return of “stagflation”. That was an economic phenomenon of the 1970s when economies suffered from the unusual combination of slow growth and high inflation. However, they point out that unique circumstances that arose in 1970s were critical to creating these effects – circumstances that are not present today.

Mr. Malpass said that the pressure on energy prices may increase if Russia decides to cut back supplies to Europe. The ultimate impact of that would depend upon the ability and willingness of other energy producers to increase production. He cited Canada, the U.S., India, and China as possible alternatives.