Economic Buzz: IMF Slashes Global Growth Projection For 2023 To 2.7%

12 Oct 2022 , 08:33 AM

The International Monetary Fund lowered the global growth projection for next year and warned that the world economy is set to witness more pain next year. The global lender cut the growth projection for next year to 2.7 percent from 3.3 percent, while it retained the outlook for this year at 3.2 percent after a 6.0 percent expansion in 2021. Roughly a third of the world economy faces two consecutive quarters of negative growth, the lender said. The IMF forecast global inflation to climb to 8.8 percent this year from 4.7 percent last year. The pace of price growth is projected to decline to 6.5 percent next year and to 4.1 percent by 2024. Risks to the outlook remain unusually large and to the downside, and monetary policy could miscalculate the right stance to reduce inflation, the IMF warned. However, the front-loaded and aggressive monetary tightening is critical to avoid inflation de-anchoring as a result of households and businesses basing their wage and price expectations on their recent inflation experience, the report said. Fiscal policy should continue to give targeted support to vulnerable groups, at the same time it should remain tight enough not to derail monetary policy, the IMF said. The global surge in food and energy prices is set to drive global inflation to a peak of 9.5 percent this year before decelerating to 4.1 percent by 2024. Inflationary pressures are proving to be more broader and more persistent than anticipated, the IMF said.Powered by Commodity Insights