Economic Buzz: IMF Slashes Global Growth Forecast To 3.2% Amid Gloomy And More Uncertain Outlook

27 Jul 2022 , 09:58 AM

The International Monetary Fund (IMF) on Tuesday cut its forecast for global economic growth for 2022 to 3.2 percent, 0.4 percentage point lower than in the April 2022 World Economic Outlook, as the world – still reeling from the coronavirus pandemic and Ukraine conflict – now faces increasing risks including high inflation. The agency stated in its Word Economic Outlook that a tentative recovery in 2021 has been followed by increasingly gloomy developments in 2022 as risks began to materialize. Global output contracted in the second quarter of this year, owing to downturns in China and Russia, while US consumer spending undershot expectations. Several shocks have hit a world economy already weakened by the pandemic: higher-than-expected inflation worldwide–especially in the United States and major European economies–triggering tighter financial conditions; a worse-than-anticipated slowdown in China, reflecting COVID19 outbreaks and lockdowns; and further negative spillovers from the war in Ukraine. Downgrades for China and the United States, as well as for India, are driving the downward revisions to global growth during 2022-23, which reflect the materialization of downside risks highlighted in the April 2022 World Economic Outlook. A sharper slowdown in China due to extended lockdowns, tightening global financial conditions associated with expectations of steeper interest rate hikes by major central banks to ease inflation pressure, and spillovers from the war in Ukraine have added to growth concerns. With growth near 3 percent in 2022-23, a decline in global GDP or in global GDP per capita?sometimes associated with global recession?is not currently part of the baseline scenario although projections for growth on a fourth-quarter-over-fourth-quarter basis point to a significant weakening of activity in the second half of 2022, IMF said in its report. Powered by Commodity Insights