The International Monetary Fund (IMF) on Tuesday published an update to its report titled "World Economic Outlook," in which it stated that the growth of the global economy had been revised down to 3.2 percent for the year from 3.2 percent for April.
According to the report from the IMF, the growth of the global economy in 2023 could be an even more paltry 2.9 percent. With rates at 6.6 percent in advanced nations and 9.5 percent in emerging markets and developing economies, inflation is also running rampant globally compared to previous years, which is atypical for a weakening economy.
The International Monetary Fund (IMF) cited the damage done to European economies by the Russian-Ukrainian War, lockdowns in China, inflation eating away at the spending power of consumers, and tightening monetary policy around the world as causes for the reduction in growth estimates.
🆕 The IMF projects the global economy to slow further to 3.2% in 2022 and 2.9% in 2023. The risk of unusually low growth is high. Read our analysis in the World Economic Outlook update. https://t.co/ldMsaieJUU #WEO pic.twitter.com/tbjQASegwq
— IMF (@IMFNews) July 26, 2022
The projected economic growth in the United States for 2022 was reduced by 1.4 percentage points from April's predictions to 2.3 percentage points, and the growth in 2023 is expected to be just 1.0 percentage points, both of which are down considerably less than the 5.7 percentage point growth that was recorded in 2021 as the economy recovered from the pandemic.
The IMF report also added that if Russia suddenly stopped all gas flows to Europe, inflation did not abate at the pace it was expected to, or widespread lockdowns in China continued, the global economy could see growth as low as 2.6 percent in 2022 and 2.0 percent in 2023. These projections are based on the assumption that Russia will not experience any of the aforementioned scenarios.
IMF Chief Economist Pierre-Olivier Gourinchas stated in a press conference that "the world may soon be teetering on the edge of a global recession, only two years after the last one." He added that "the global economy has only grown at 2.0 percent or less five times since 1970." Gourinchas also stated that "the world may soon be teetering on the edge of a global recession."
According to the argument made in the paper, “Taming inflation should be the first priority for policymakers. Tighter monetary policy will inevitably have real economic costs, but delay will only exacerbate them”.
Although strong monetary policy will further stifle economic growth, the International Monetary Fund believes in the report that bringing inflation under control should be the top priority for central banks around the world.
The preceding is a summary of an article that originally appeared on WND.