{"id":129166,"date":"2022-10-12T15:40:10","date_gmt":"2022-10-12T22:40:10","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=129166"},"modified":"2022-10-12T15:40:10","modified_gmt":"2022-10-12T22:40:10","slug":"imf-cuts-2023-global-growth-forecast-says-worst-yet-to-come","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2022\/10\/12\/imf-cuts-2023-global-growth-forecast-says-worst-yet-to-come\/","title":{"rendered":"IMF cuts 2023 global growth forecast, says worst yet to come"},"content":{"rendered":"

Courtesy Adaderana<\/em><\/span><\/h2>\n\n\n

The International Monetary Fund warned on Tuesday that colliding pressures from inflation, war-driven energy and food crises and sharply higher interest rates were pushing the world to the brink of recession and threatening financial market stability.<\/p>\n\n\n\n

In gloomy reports issued at the start of the first in-person International Monetary Fund and World Bank annual meetings in three years, the IMF urged central banks to keep up their fight against inflation despite the pain caused by monetary tightening and the rise in the U.S. dollar to a two-decade high, the two main drivers of a recent bout of financial market volatility.<\/p>\n\n\n\n

Cutting its 2023 global growth forecasts further, the IMF said in its World Economic Outlook that countries representing a third of world output could be in recession next year.<\/p>\n\n\n\n

The three largest economies, the United States, China and the euro area, will continue to stall,\u201d Pierre-Olivier Gourinchas, the IMF\u2019s chief economist, said in a statement. In short, the worst is yet to come, and for many people, 2023 will feel like a recession.\u201d<\/p>\n\n\n\n

The IMF said Global GDP growth next year will slow to 2.7%, compared, down from its July forecast of 2.9%, as higher interest rates slow the U.S. economy, Europe struggles with spiking gas prices and China contends with continued COVID-19 lockdowns and a weakening property sector.<\/p>\n\n\n\n

The global lender maintained its 2022 growth forecast at 3.2%, reflecting stronger-than-expected output in Europe but a weaker performance in the United States, after torrid 6.0% global growth last year as the COVID-19 pandemic eased.<\/p>\n\n\n\n

Some key European economies will fall into technical recession\u201d next year, including Germany and Italy, as energy price spikes and shortages slam output. China\u2019s growth outlooks also were downgraded as it struggles with continued COVID-19 lockdowns and a weakening property sector, where a deeper downturn would slow growth further, the IMF said.<\/p>\n\n\n\n

The growing economic pressures, coupled with tightening liquidity, stubborn inflation and lingering financial vulnerabilities, are increasing the risks of disorderly asset repricings and financial market contagions, the IMF said in its Global Financial Stability Report.<\/p>\n\n\n\n

It\u2019s difficult to think of a time where uncertainty was so high,\u201d Tobias Adrian, the IMF\u2019s monetary and capital markets director, told Reuters in an interview. We have to go back decades to see so much conflict in the world, and at the same time inflation is extremely high.\u201d<\/p>\n\n\n\n

Finance officials from the IMF\u2019s 190 member countries this week are grappling with these uncertainties from differing economic positions in Washington, along with food and energy crises prompted by the war in Ukraine and other global challenges including massive clean energy financing needs.<\/p>\n\n\n\n

The IMF said central bankers had a delicate balancing act to fight inflation without over-tightening, which could push the global economy into an unnecessarily severe recession\u201d and heap economic pain on emerging markets that are seeing their currencies fall sharply against the dollar.<\/p>\n\n\n\n

But Gourinchas said controlling inflation was the bigger priority and letting up too soon would undermine central banks\u2019 hard-won credibility.\u201d<\/p>\n\n\n\n

What we are recommending is that central banks stay the course. Now that doesn\u2019t mean that they should accelerate compared to what they\u2019ve been doing,\u201d Gourinchas said in a news conference, adding that it was a bit early\u201d to shift course.<\/p>\n\n\n\n

I think right now our advice is, \u2018let\u2019s make sure we see a decisive decline in inflation.\u2019\u201d<\/p>\n\n\n\n

The IMF forecast that global headline consumer price inflation would peak at 9.5% in the third quarter of 2022, declining to 4.7% by the fourth quarter of 2023.<\/p>\n\n\n\n

But the outlook could darken considerably if the world economy is hit by a plausible combination of shocks,\u201d including a 30% spike in oil prices from current levels, the IMF said, pushing global growth down to 1.0% next year – a level associated with widely falling real incomes.<\/p>\n\n\n\n

Other components of this downside scenario\u201d include a steep drop-off in Chinese property sector investment, a sharp tightening of financial conditions brought on by emerging market currency depreciations and a continued overheating of labor markets that results in lower potential output.<\/p>\n\n\n\n

The IMF put a 25% probability of global growth falling below 2% next year – a phenomenon that has occurred only five times since 1970 – and said there was more than a 10% chance of a global GDP contraction.<\/p>\n\n\n\n


Source: Reuters<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Courtesy Adaderana The International Monetary Fund warned on Tuesday that colliding pressures from inflation, war-driven energy and food crises and sharply higher interest rates were pushing the world to the brink of recession and threatening financial market stability. In gloomy reports issued at the start of the first in-person International Monetary Fund and World Bank […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[102],"tags":[],"class_list":["post-129166","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/129166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=129166"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/129166\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=129166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=129166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=129166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}