IMF cuts global growth forecast, warns of recession

The International Monetary Fund (IMF) has cut its forecast for global growth from 3.6 to 3.2 percent, due to high inflation and the war in Ukraine, and warned that the world may be “on the brink of a global recession,” writes Reuters.

In an update to its global growth forecast on Tuesday, the IMF warned of risks to the global economy that, if unchecked, could push the world into recession.

High inflation and risks posed by Russia’s invasion of Ukraine are responsible for putting the global economy at risk, the IMF has said, adding that “worst possible” scenarios are not being ruled out.

In a statement, the chief economist of the IMF, Pierre-Olivier Gourinchas, has said that “the world may soon be on the verge of a global recession, just two years after the previous one”.

Gourinchas added that the current environment shows that “the chance that the US economy will avoid a recession is quite small.”

Worldwide GDP growth will slow to 3.2% in 2022. The new estimate follows the IMF’s forecast of 3.6% growth in April this year.

“The perspective has changed significantly since April,” Gourinchas said.

He added that the world’s three largest economies, the United States, China and the Eurozone, are stagnating with consequences for the global outlook.

The statement said global GDP shrank in the second quarter due to declines in China and Russia.

The Chinese economy, affected by COVID-19 and various other crises, is expected to grow by 3.3%, which is 1.1 percentage points less compared to previous estimates.

The IMF also lowered its growth forecast for 2023 from the 3.6% announced in April to 2.9%./

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