The IMF comes with warning of the economic crisis: The Worst Will Come

A third of the world's economy could drop into recession by 2023, said the International Monetary Fund's new forecast (FMN). The forecast is on the lowest mark ever in the last 20 years except for predictions during pandemic and the global financial crisis.

As the main reason the IMF cites the rapid increase in prices that after the Russian attack on Ukraine, which has obviously limited purchasing capacity. The world economy faces huge challenges because inflation is longer than thought, and China is losing purchasing capacity. The worst “is expected to come and many people in 2023 will have the sense of a recession”, says IMF economist Pierre-Olivivier Gourinchas.

Generally. The IMF has turned down the 2023 forecast again. According to the latest report, the world economy will grow by only 2.7 per cent, by July 2.9 per cent are expected. For the following year, 2022 accounts for a plus 3.2 per cent. Against the year 2021 with a 6.0 per cent increase, the actual quota is dim.

The most important economic regions are weakening Europe is particularly affected by war in Ukraine. Gas prices have multiplied since 2021. In the U.S., consumption is no longer giving impulses as usual to the economy, and in China there are negative effects of Corona's limitations as well as tensions in the automotive market.

When will inflation end?

The IMF predicts inflation, meanwhile, in many countries has been at the highest level for several decades and at the end of 2022, will reach its peak. But it will continue to remain at an apparent high level. Worldwide, consumer prices will rise by 8.8 per cent and 2023 to about 6.5 per cent. So predictions so far will again be corrected with increasing numbers. A price increase of 4.1 per cent is expected in 2024. Countries in expansion and development will be more seriously affected than industrialized countries. To strengthen the dollar, currently at the highest level of two decades is a big problem

Focusing is currently the banks of the reserves, which are recently trying to significantly increase interest in achieving a sustainable price development. According to the IMF, this policy can have consequences, because rising interests can shake off economic growth, while reluctance to increase interests cannot stem inflation.

Russia's economy is shrinking less than thought

Another result of the annual report is that the Russian economy, although it will have contractions this year and next year, its decline will be lower than anticipated. According to this report, Russia's gross domestic product in 2022 will drop by 3.4 per cent and in 2023 by 2.3 per cent. The effect of Western sanctions feels little in Russia's financial sector. Even the labour market is resistant, according to the IMF.

Slowing in the Three Greatest Economies

Since the presentation of the annual report, IMF chief Kristalina Georgieva had made it clear, that predictions for conflict have decreased. She also stresses that the situation may get worse before starting improvement. In the context of the Russian war in Ukraine and the pandemic, uncertainty is extremely high. There may be more economic friends. <x0) The weakening of economic growth in the United States, China and the Eurozone has significant consequences to the world economy. / DW