The International Monetary Fund (IMF) said that its baseline forecast predicts growth in the global GDP to slow from last year’s 6.1 percent to 3.2 percent this year and 2.9 percent next year, downgrades of 0.4 and 0.7 percentage points from the IMF April World Economic Outlook.
The IMF attributed this to stalling growth in the world’s three largest economies – the United States, China and the euro area.
Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year.
The outlook has darkened significantly since April, said Pierre-Olivier Gourinchas, Economic Counsellor and the Director of Research of the IMF, in a press conference, adding that the world may soon be teetering on the edge of a global recession, only two years after the last one.
