global economic outlook IMF Managing Director Kristalina Georgieva said the past few months have been “very dark” and the world faces an increasing risk of recession in the next one year. He added that the shock in commodity prices following the Russo-Ukraine war has exacerbated the cost of living crisis for people and is “only getting worse”.
“When the G20 last met in April, the IMF lowered its global growth forecast for this year and next to 3.6 percent – and we warned it could get worse given the potential downside risks Since then, many of those risks have materialized – and many of the crises facing the world have intensified,” she said in a blogpost.
newest US inflation Data showed consumer prices rose 9.1 per cent year-on-year in June due to higher gas, food and rent prices. This is the biggest 12-month increase since 1981, and is up from the 8.6 percent jump in May. On a monthly basis, prices rose 1.3 percent from May to June, another significant increase followed by a 1 percent increase in prices from April to May.
“Inflation is higher than expected and has been driven by food and energy prices. This has prompted major central banks to announce further monetary tightening – which is necessary but will weigh on the recovery. Georgieva said continued disruptions related to the pandemic—particularly in China—and renewed disruptions in global supply chains have hampered economic activity.
The International Monetary Fund’s MD said recent economic indicators indicate a weak second quarter – and “we will forecast a further decline in global growth for both 2022 and 2023.” World Economic Outlook Update later this month”.
She also said the outlook remains extremely uncertain. Think about how further disruption of natural gas supplies in Europe could drive many economies into recession and trigger a global energy crisis. This is only one of the factors that can worsen an already difficult situation.
“It’s going to be a tough 2022 – and possibly an even tougher 2023, with increased risk of recession,” Georgieva said in the blogpost.
They have highlighted three priorities: countries should do everything in their power to reduce high inflation; Fiscal policy should help – and not hinder – central bank efforts to reduce inflation; And a new impetus is needed for global cooperation led by the G20.
On inflation, she said, “persistently high inflation could curtail recovery and further damage living standards, especially for vulnerable people. Inflation has already reached several-decade highs in many countries, with the headline being And core inflation continues to rise in both.
A total of 75 central banks, which the IMF tracks nearly three-fourths of central banks, have raised Rate of interest From July 2021.
Countries facing high debt levels will also need to strengthen their fiscal policy. This will help reduce the burden of increasingly costly borrowings as well as supplement monetary efforts to contain inflation. “In the medium term, structural reforms are also important to spur growth: think about labor market policies that help people join the workforce, especially women,” she said.
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