The International Monetary Fund (IMF) on Tuesday downgraded its forecast for the global economy this year and next year due to rising inflation in the US and China. It now anticipates growth in 2022 at 3.2%, which is 0.4% lower than its April forecast.
“The outlook has darkened significantly since April,” said IMF chief economist Pierre-Olivier Gourinchas. “The world may soon be teetering on the edge of a global recession, only two years after the last one.”
“The world’s three largest economies, the United States, China and the euro area are stalling with important consequences for the global outlook,” he said at a briefing.
In its latest World Economic Outlook, the IMF expects the world economy to grow 3.2% this year, before dropping to a rate of 2.9% in 2023. The revisions represent a decrease of 0.4 and 0.7 percentage points, respectively, from the forecasts made in April.
Last year’s “tentative recovery” from the pandemic downturn “has been followed by increasingly gloomy developments in 2022 as risks began to materialize,” the report said.
“Several shocks have hit a world economy already weakened by the pandemic,” including the war in Ukraine, which has driven up global food and energy prices, forcing central banks to significantly boost interest rates, according to the IMF.