Morgan Stanley forecasts this year’s global economic growth to be less than half of 2021 due to risks from the Russia-Ukraine conflict and COVID-19 surge in China even as central banks tighten monetary policy to control record high inflation.

The brokerage expects global growth to be at 2.9%, about 40 basis points below consensus, compared with the 6.2% growth in 2021, on a year-on-year basis.

“The deceleration is global, driven by the combination of waning fiscal impetus, tightening monetary policy, a continuing drag from Covid, persistent supply chain frictions, and, most recently, repercussions from the Russian invasion of Ukraine,” wrote Morgan Stanley economists in a note dated Tuesday.

Commodity and oil prices have skyrocketed after Russia was slapped with Western sanctions for its invasion of Ukraine, worsening inflationary pressures globally and prompting governments and central banks to reassess their monetary policies.

China’s tighter COVID-19 curbs have halted factory production and crimped domestic demand, taking a toll on its economy with export growth slowing to its weakest in almost two years.

With a resolution to the Ukraine crisis looking unlikely and global central banks already trying to slow growth to tame inflation, Morgan Stanley economists expect the upside for economic growth to be limited.

Last week, central banks of U.S. and UK joined other major economies to raise interest rates in a bid to cope with a surge in inflation which they had described as transitory following the post-pandemic reopening of the global economy, before Russia’s invasion of Ukraine sent energy prices spiraling.

Morgan Stanley said the slower global growth is broadly-based, and the only two major economies where brokerage does not see substantial slowing are Japan and India.

“We now do not see global GDP returning to the pre-Covid trend in the forecast period,” the brokerage added.