July 27, 2022
The world’s economic picture is “gloomy and more unpredictable,” according to the International Monetary Fund, which lowered its predictions for global growth in 2022 and 2023 on Tuesday.
The world economy is now predicted by the IMF to expand by 3.2 percent this year before slowing down even more to a GDP rate of 2.9 percent in 2023. The revisions represent a 0.4 and 0.7 percentage point decrease from its April projections, respectively.
According to the Washington-based institution, the updated prognosis showed that the adverse risks mentioned in its prior assessment were now becoming a reality. Rising global inflation, a slower-than-anticipated slowdown in China, and the continued effects of the war in Ukraine are a few of these difficulties.
The report stated that “a promising comeback in 2021 has been followed by progressively bleak developments in 2022.”
“Several shocks have hit a world economy already weakened by the pandemic,” the report continued. “Higher-than-expected inflation worldwide — especially in the United States and major European economies — triggered tighter financial conditions; a worse-than-anticipated slowdown in China, reflecting COVID19 outbreaks and lockdowns; and further negative spillovers from the war in Ukraine.”
The upcoming slowdown would be the first quarterly global real GDP decline since 2020. Global growth might drop to about 2.6 percent in 2022 and 2.0 percent in 2023 under a “plausible” but less likely alternative scenario, according to the IMF, placing global growth in the bottom 10 percent of outcomes since 1970.
Last month, the World Bank reduced its projection for global growth in 2022 from 4.1 percent to 2.9 percent, citing the same macroeconomic headwinds.
It comes as inflation, driven primarily by rising food and energy prices, is expected to increase through 2022.
This year, the global inflation prediction has been revised upward by 0.9 and 0.8 percentage points, respectively, to 6.6 percent in advanced economies and 9.5 percent in emerging market and developing nations.
Source: CNBC
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