World Bank warns over global recession. What it means for Kitsap county?

The head of the World Bank has warned that Russia’s invasion of Ukraine could cause a global recession as the price of food, energy and fertiliser jump.

David Malpass told a US business event on Wednesday that it is difficult to “see how we avoid a recession”. He also said that a series of coronavirus lockdowns in China is adding to concerns about a slowdown.

His comments are the latest warning over the rising risk that the world economy may be set to contract.

Malpass did not elaborate to give a specific forecast on how deep a recession might be.

He is the latest high-profile figure in the finance sector to predict a looming recession.

Last week, Wells Fargo CEO and president Charlie Scharf said it was going to be hard for the U.S. to avoid “some kind of recession,” joining the ranks of Deutsche Bank and a top strategist at Morgan Stanley.

Meanwhile, 75% of Fortune 500 CEOs said this month that they were bracing for a recession.

A recession is typically categorized by a decline in GDP over two successive quarters.

The U.S. economy shrank by 1.4% in the first quarter of this year, despite steady consumer spending.

Malpass also said that many European countries were still too dependent on Russia for oil and gas.

That’s even as Western nations push ahead with plans to reduce their dependence on Russian energy.

He also told a virtual event organised by the US Chamber of Commerce that moves by Russia to cut gas supplies could cause a “substantial slowdown” in the region.

He said higher energy prices were already weighing on Germany, which is the biggest economy in Europe and the fourth largest in the world, the BBC reported.

IMPACT OF GLOBAL RECESSION ON KITSAP COUNTY

The thought of entering a recession isn’t a positive one for most small business owners. Yet periods of economic downturn don’t automatically have to be a disastrous experience, provided business owners prepare for them.

Reduced profits

This means small business might find it more difficult to generate its usual sales, and small business owners need to cut costs accordingly.

Businesses are less likely to invest in new products, employees might be made redundant, and overheads are slashed to account for a reduction in profit.

Falling Stocks and Slumping Dividends

As declining revenues show up on its quarterly earnings report, the manufacturer’s stock price may decline. Dividends may also slump or disappear entirely. The internal advertising and marketing departments may also face a personnel shakeup.

Employee Lay-Offs and Benefit Reductions

The small business in Kitsap may cut employees, and more work will have to be done by fewer people. Productivity per employee may increase, but morale may suffer as hours become more extended, work becomes more arduous, wage increases are stopped, and fear of further layoffs persists.

Loss of Demand

Small businesses in Kitsap county that depend on a few major customers for the bulk of their revenue could lose a significant amount of income if one or more of those customers reduces their purchase amount or stops buying completely. 

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