Things will only get worse, the IMF said after issuing a gloomy economic report.
By Daniel J. Graeber
Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF) Tobias Adrian said there are dark storm clouds lingering over the global economy.
Photo by Bonnie Cash/UPI | License Photo
Oct. 11 (UPI) -- The International Monetary Fund reported the weakest global economic growth profile in more than 20 years Tuesday and said the worst is yet to come.
The IMF expects the global economy to grow by 2.7% in 2023. That's 0.2% lower than the IMF predicted in July and it comes amid expectations that the economies of China, the European Union and the United States -- three of the world's largest -- will continue to falter
"The worst is yet to come, and for many people 2023 will feel like a recession," the IMF's report read.
The report comes on the heels of the troubling outlook from IMF Director Kristalina Georgieva, who said last week that "shock after shock after shock" -- a reference to climate disasters, the COVID-19 pandemic and the war in Ukraine -- means the global economy could be facing a loss of $4 trillion over the next four years.
Oct. 11 (UPI) -- The International Monetary Fund reported the weakest global economic growth profile in more than 20 years Tuesday and said the worst is yet to come.
The IMF expects the global economy to grow by 2.7% in 2023. That's 0.2% lower than the IMF predicted in July and it comes amid expectations that the economies of China, the European Union and the United States -- three of the world's largest -- will continue to falter
"The worst is yet to come, and for many people 2023 will feel like a recession," the IMF's report read.
The report comes on the heels of the troubling outlook from IMF Director Kristalina Georgieva, who said last week that "shock after shock after shock" -- a reference to climate disasters, the COVID-19 pandemic and the war in Ukraine -- means the global economy could be facing a loss of $4 trillion over the next four years.
"Their combined impact is driving a global surge in prices, especially on food and energy, causing a cost-of-living crisis," she said.
Pent-up demand during the post-vaccination stage of the pandemic overwhelmed supply chains and led to an increase in the cost of most consumer goods toward the end of 2021. Energy and geopolitics collided in February when resource-rich Russia invaded Ukraine, adding a substantial risk premium to the price of everything from grains to crude oil.
The global economy expanded by 6% last year. If IMF forecasts are accurate, growth next year will be the slowest since 2001 -- save for the deep scars during the worst of the pandemic.
Inflation, meanwhile, is expected to peak this year, but it's been a staggering rise. Global inflation was 4.7% in 2021, but it's expected to level out at 8.8% this year and "remain elevated for longer than previously expected," the IMF said.
While the strains are most apparent in major economies such as the European Union and the United States, it's the emerging and developing markets that could bear the brunt of the downturn.
Axel Van Trotsenburg, the managing director of operations at the World Bank, told CNBC about half of the global population is already forced to survive on less than $10 a day.
While the strains are most apparent in major economies such as the European Union and the United States, it's the emerging and developing markets that could bear the brunt of the downturn.
Axel Van Trotsenburg, the managing director of operations at the World Bank, told CNBC about half of the global population is already forced to survive on less than $10 a day.
"We see extreme poverty again increasing," he said.
The war in Ukraine and the lingering impacts of the pandemic combine to pose challenges to economic policymakers working to keep their economies from tumbling into recession. Higher lending rates should curb demand enough to dampen inflation, but the seemingly simultaneous way in which policymakers are acting suggests a global recession may be unavoidabl
All told, Tobias Adrian, a financial counselor for the IMF, said the global economic situation is dire.
"The global environment is fragile with storm clouds on the horizon," he said.
The war in Ukraine and the lingering impacts of the pandemic combine to pose challenges to economic policymakers working to keep their economies from tumbling into recession. Higher lending rates should curb demand enough to dampen inflation, but the seemingly simultaneous way in which policymakers are acting suggests a global recession may be unavoidabl
All told, Tobias Adrian, a financial counselor for the IMF, said the global economic situation is dire.
"The global environment is fragile with storm clouds on the horizon," he said.
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