IMF predicts grim global economy perspective

The IMF said it expects growth to slow down from 6.1% last year across the globe to 3.2% this year, 0.4 per cent lower than the forecast in April.

A unstable recovery in 2021 was followed by increasingly grim developments in 2022 after risks began materialising”, the IMF said. “Global production contracted in the second quarter of this year, due to economic declines in China and Russia, while US consumer spending was less than expectations”.

The Washington-based international financial agency said that “several shocks have shaken the world economy already weakened by pandemic: higher inflation than expected worldwide especially in the United States and major European economies by causing more difficult financial conditions; a higher slowdown than anticipated in China, and further negative consequences from Russia's war in Ukraine. ”

The IMF said the price of consumer goods, especially for food and energy, is growing worldwide. The cost is expected to increase by 6.6% in advanced economies this year, and by 9.5% in emerging and fast development markets.

The IMF said the war in Ukraine “could lead to a sudden” halt of Russian natural gas exports to European countries, and that “inflation may be harder to sit than expected” if employers cannot find enough workers to meet their demands for work or if inflation grows at a faster rate than expected.

The IMF said that an alternative “scenario” to its already low forecast would be a global economy “which risks materialise, inflation increases further, and global growth dropped” to about 2.6% and 2% in 2022 and 2023, respectively.

With price hikes continuing to lower living standards worldwide, easing inflation should be the first priority for policymakers, the IMF said.