WASHINGTON: The International Monetary Fund (IMF) said the risks to the bank’s updated economic outlook are heavily leaning downward especially amid prospects of a prolonged conflict in Ukraine, inability to rein in inflation and geopolitical fragmentation, reported Sputnik.
The IMF, in its updated World Economic Outlook (WEO) released on Tuesday, projected that global growth will slow to 3.2 per cent in 2022, 0.4 per cent lower than April’s outlook. In 2023, the IMF projects global growth to be 2.9 per cent, 0.7 percentage points lower than its previous forecast.
“The risks to the outlook are overwhelmingly tilted to the downside,“ the IMF said in the report. “A plausible alternative scenario in which risks materialise, inflation rises further, and global growth declines to about 2.6 per cent and 2.0 per cent in 2022 and 2023, respectively, would put growth in the bottom 10 per cent of outcomes since 1970.”
Runaway inflation, the Ukraine conflict and debt distress are tops among those risks, the report said.
“The war in Ukraine could lead to a sudden stop of European gas imports from Russia,“ the report said. “Inflation could be harder to bring down than anticipated either if labour markets are tighter than expected or inflation expectations unanchor.”
Tighter global financial conditions could induce debt distress in emerging market and developing economies, the report added.
The IMF said it is also concerned that renewed Covid-19 outbreaks and lockdowns and escalation of the property crisis might further suppress Chinese growth. In addition, the report said geopolitical fragmentation could impede global trade and cooperation.-Bernama
