IMF predicts more volatility as world economy nears recession

The International Monetary Fund forecasts global slowdown and rising inflation rates

Global economy                                 
The International Monetary Fund (IMF) says global economic growth will fall from 6.1% in 2021 to 3.2% in 2022 – Photo: Shutterstock

new report by the International Monetary Fund (IMF) has said that the global economy could edge towards a recession as it predicted a slowdown in overall economic growth from 6.1% in 2021 to 3.2% in 2022.

IMF’s report pointed to increasing inflation rates, reduced household spending and the Russian invasion of Ukraine as key factors affecting the economy, which was already weakened by the Covid-19 pandemic as well as problems in the US and China leading to a deepening fear of a global recession.

“The risks to the outlook are overwhelmingly tilted to the downside,” said the IMF. “The baseline forecast is for growth to slow from 6.1% last year to 3.2% in 2022, 0.4 percentage point lower than in the April 2022 World Economic Outlook.”

Taming inflation ‘should be the priority’

Rapidly rising inflation rates and poorly performing digital assets have led to tighter monetary policies and a gloomy outlook in the economic forecast. The IMF’s baseline projection for global inflation sits at 8.3% by the fourth quarter in 2022, up from the 6.9% it estimated in April.

The report suggested that taming inflation should be the first priority for policymakers as the increase in the cost of living as well as a surge in gas and electricity prices needs to be addressed by government policies. It stated that although tighter monetary policy will have economic costs, delaying these policies will only exacerbate them.

“Global inflation has been revised up due to food and energy prices as well as lingering supply-demand imbalances, and is anticipated to reach 6.6% in advanced economies and 9.5% in emerging market and developing economies this year,” added the IMF. “In 2023, disinflationary monetary policy is expected to bite, with global output growing by just 2.9%.”

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image