Connect with us

Hi, what are you looking for?

Industrial Policy

Global economy to slow down further, IMF says

The International Monetary Fund updated Tuesday its global growth outlook to 3.2 percent this year and 2.9 percent the next, a further downgrade to an already downbeat April outlook of 3.6 percent for both this year and next.

It also revised inflation upward to 6.6 percent in advanced economies and 9.5 percent in emerging markets — nearly a full percentage point higher than previously forecasted.

Fighting inflation should be “the first priority,” the fund said in its latest report, counselling central banks that started tightening monetary policy that they should stay the course. Meanwhile, governments should target any spending meant to cushion inflation impacts to the most vulnerable and offset those outlays by higher taxes or spending cuts elsewhere, so as to avoid adding to inflationary pressures.

“Tighter monetary policy will inevitably have real economic costs, but delay will only exacerbate them,” the IMF wrote.

The world’s economy contracted in the second quarter of this year, the fund said, due to high inflation in the U.S. and Europe, COVID-19 lockdowns in China, and Russia’s war in Ukraine.

The eurozone is now expected to grow by 2.6 percent this year and 1.3 percent the next, down from the previous forecast of 2.9 percent this year and 2.5 percent in 2023.

The fund sees multiple risks clouding the horizon, including the end of Russian gas flows to Europe, a de-anchoring of inflation expectations, tighter financing conditions, renewed COVID-19 outbreaks, social unrest triggered by food insecurity and high energy prices, and trade restrictions.

If these risks materialize, global growth would further slow down and grind to a halt in the U.S. and Europe in 2023, the fund said.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like


Former German Chancellor Gerhard Schröder will not be kicked out of the Social Democrats (SPD), despite his business links to Russian energy companies and...


Press play to listen to this article Russia’s invasion of Ukraine prompted most of the EU to wake up to the danger of depending...


Press play to listen to this article KAUB, Germany — Grand plans to shift freight off roads and onto rivers don’t much matter if...


Press play to listen to this article Ivo Daalder, former U.S. ambassador to NATO, is president of the Chicago Council on Global Affairs and...


Ukrainian President Volodymyr Zelenskyy called for sanctions on the Russian nuclear industry and nuclear fuel after an atomic power plant in Ukraine was shelled....


A second senior commander of the militant Islamic Jihad group was killed overnight, Reuters reported on Sunday, amid continuing fighting between Israel and Palestinians...


A group of ships carrying grain left Ukrainian ports on Sunday, the second shipment since an agreement late last month to unblock the ports,...

Industrial Policy

Press play to listen to this article With tensions flaring in East Asia, China’s sanctions against Taiwan are a stark reminder to the European...