The global economy may be headed for years of weak growth and rising prices, a toxic combination that will test the stability of dozens of countries still struggling to rebound from the pandemic, the World Bank warned on Tuesday.

The 189-country anti-poverty agency predicted that the world economy will expand by 2.9 per cent this year. This would be markedly lower from the 5.7 per cent global growth in 2021 and the 4.1 per cent it had forecast for 2022 in its January outlook.

Advanced and a good number of developing economies had their forecasts also lowered due to the high inflation caused by the supply-chain disruption and higher commodity prices after Russia’s invasion of Ukraine.

In the meantime, the eurozone economy grew much faster in the first quarter of the year than in the previous three months despite the impact of the war in Ukraine, the European Union statistics office said on Wednesday, revising its earlier estimates sharply higher.

GDP in the currency bloc expanded by 0.6 per cent from the fourth quarter, when the economy had advanced by 0.2 per cent. Economic growth improved to 5.4 per cent from 4.7 per cent on an annual basis with the latest estimate being bigger than the initial estimate of 5.1 per cent.

However, Kevin Swift, senior economist for Global Chemicals at ICIS, said that the largest positive contribution to the growth figures in the first quarter came from inventories, which can “change quickly should inventory-to-sales ratios downstream” reach elevated levels.

Finally, in the UK, the average house price hit a fresh high in May, rising for the 11th consecutive month, according to Halifax data, while the annual growth rate slowed signalling that the cost-of-living crisis is cooling the market.

House prices climbed by one per cent month-on-month in May, slower than the 1.2 per cent rise in April. On an annual basis, house price growth slowed slightly to 10.5 per cent in May from 10.8 per cent in April, being the slowest rate of growth since the start of 2022.

“Despite the very real cost-of-living pressures some people are experiencing, the imbalance between supply and demand for properties remains the primary reason driving the continued climb in house prices,” Russell Galley, managing director at Halifax, said in a report.

This report was compiled by Bank of Valletta for general information purposes only.