The World Bank’s latest Global Economic Prospects report stated global growth is expected to decrease this year to 2.4%, down from an estimated 2.6% last year. This would be the third-straight year of slowing global economic growth.

World Bank Group Deputy Chief Economist Ayhan Kose sits down with Yahoo Finance Reporter Jennifer Schonberger to discuss what's driving global economic slowdowns.

"We used to focus on financial stress because of high interest rates. Now, given the war, Russian invasion of Ukraine, and then now the conflict in the Middle East and the other geopolitical tensions associated with trade fragmentation, the fragmentation of investment networks, we are focusing on geopolitical tensions," Kose touches on some of the biggest influences for slowing growth. "In the context of escalation of conflicts in the Middle East or Eastern Europe, obviously, we worry about the possible increase in energy prices and the impacts on inflation. First, headline inflation and true second-round effects core inflation, as well."

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Editor's note: This article was written by Nicholas Jacobino.

Video Transcript

JENNIFER SCHONBERGER: So while you do expect a soft landing, you expect growth will remain well below potential absent, some sort of corrective action from policy makers for the rest of the 2020s, right? What's really driving that?

AYHAN KOSE: So there are some good news. The resilience and having still good growth, I think these are good news. At the same time, when you look at the bigger picture and put these growth numbers into historical perspective, you realize that over the 2024 period, global economy has registered the weakest growth rate in half decade.

And you look at, you know, the growth number this year around 2.4%. That's around 0.8% points lower than what we had prior to the pandemic on average in 2010s. For emerging developing economies, almost 1% point lower growth this year than the average of 2010s.

The big challenge around the world, of course, investment remains weak. Investment growth numbers and trade remains weak. And you have way too much uncertainty between geopolitical tensions and fragmentation of trade and investment networks.

JENNIFER SCHONBERGER: All right. Well, let's talk about-- you talk about downsides to growth in this report. And chief among them is the conflict in the Middle East and the potential to push up commodity prices.

So I'm wondering how that factors into the outlook for inflation and whether we could see headline inflation jet back up towards the middle of the year and if that could seep through to already stubborn core inflation. And what could that mean for global interest rates?

AYHAN KOSE: So we are obviously worried about geopolitical tensions. That is number one in our risk metrics. When we think about all the downside risks, we used to focus on, you know, financial stress because of high interest rates.

Now given the kind of the war, Russian invasion of Ukraine, and then now the conflict in the Middle East, and the other geopolitical tensions associated with trade fragmentation, the fragmentation of investment networks, we are focusing on geopolitical tensions.

In the context of escalation of conflicts in the Middle East or Eastern Europe, obviously, the we worry about the possible increase in energy prices and the impact on inflation, first, headline inflation, and through second round effects, core inflation as well.

Having said that, our baseline implies inflation will continue coming down, not to the levels, I think, central banks are going to be comfortable with. We will still have a number of countries having inflation rates by the end of this year above their targets. But we are optimistic about the direction of inflation. And bearing these downside risks, we see that inflation will continue coming down.