IMF Cuts global Forecast
(13 October 2022 – Global) The International Monetary Fund (IMF) predicts global growth will slow to 2.7 percent next year, 0.2 percentage point lower than its July forecast, and anticipates 2023 will feel like a recession for millions around the world.
Its GDP estimate for this year remained steady at 3.2 percent, which was down from the six percent seen in 2021.
More than a third of the global economy will see two consecutive quarters of negative growth, while the three largest economies (the United States, the European Union and China), will continue to slow, the report said.
The most prominent downside risks according to the report are -
- The risk of monetary, fiscal, or financial policy miscalibration
- Deteriorating global financial conditions leading to an even stronger dollar
- Persistent inflation pressures in a tight labour market
- Further escalation of the war in Ukraine causing the energy crises to worsen.
The IMF forecast that global headline consumer price inflation would peak at 9.5 percent in the third quarter of 2022, declining to 4.7 percent by the fourth quarter of 2023. They added central bankers had a delicate balancing act to fight inflation without over-tightening, which could push the global economy into an "unnecessarily severe recession" and heap economic pain on emerging markets that are seeing their currencies fall sharply against the dollar.
“The three largest economies, the United States, China and the euro area, will continue to stall. In short, the worst is yet to come, and for many people, 2023 will feel like a recession" said IMF's chief economist, Pierre-Olivier Gourinchas
"What we are recommending is that central banks stay the course. Now that doesn't mean that they should accelerate compared to what they've been doing," Gourinchas said.
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