The euro area economy will grow just 0.5% in 2023, according to the fund, with the bloc seeing the sharpest outlook reduction among global regions. Inflation will peak later this year, the IMF forecast, with an annual rate of 8.8%, and will remain elevated for longer than previously expected, only slowing to 6.5% next year and 4.1% by 2024.įor this year, the IMF sees world growth of 3.2%, unchanged from July but down by more than a quarter from the 4.4% projected in January, before Russian President Vladimir Putin ordered an invasion of Ukraine, which disrupted food and fuel flows and exacerbated inflation globally. To be sure, the IMF sees greater risk from central banks doing too little rather than too much amid persistent price pressures, a mistake that would cost them credibility and only increase the eventual cost to bring prices under control. Speaking at the opening on Monday, IMF Managing Director Kristalina Georgieva cautioned that higher borrowing costs in the U.S., the world’s largest economy, are “starting to bite,” while World Bank President David Malpass flagged the “real danger” of a global recession. The warning comes as finance and central bank chiefs gather in Washington for the lender’s annual meetings. “As storm clouds gather, policymakers need to keep a steady hand.” “The worst is yet to come, and for many people 2023 will feel like a recession,” the lender’s chief economist, Pierre-Olivier Gourinchas, wrote in a foreword to the report. The impact of the Federal Reserve’s monetary policy tightening will be felt globally, with the dollar’s strength versus currencies in emerging and developing markets adding to inflation and debt pressures.Įxcluding the unprecedented slowdown of 2020 because of the coronavirus pandemic, next year’s performance would be the weakest since 2009, in the wake of the global financial crisis. About one third of the global economy risks contracting next year, it said, with the U.S., European Union and China all continuing to stall. The risk of policy miscalculation has risen sharply as growth remains fragile and markets show signs of stress, the IMF said Tuesday in its World Economic Outlook. The IMF cut its forecast for global growth next year to 2.7%, from 2.9% seen in July and 3.8% in January, adding that it sees a 25% probability that growth will slow to less than 2%. The International Monetary Fund warned of a worsening outlook for the global economy, highlighting that efforts to manage the highest inflation in decades may add to the damage from the war in Ukraine and China’s slowdown.
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