International Monetary Fund Warning on Tuesday The world could soon be on the verge of a global recession, as the recessions in the United States, Europe and China and the two crises of food and energy have had a major impact on growth.
In the latest updates to the global economic outlook, the IMF said the economic outlook has faded significantly in recent months as the war, inflation and resurrected pandemics in Ukraine have hurt all continents. If the bushes of threat intensify, the world economy will face one of the weakest years since 1970. This is a time of intense stagflation around the world.
In a blog post attached to the report, IMF Chief Economist Pierre Olivier Grinchas said, “The world is on the verge of a global recession just two years after the last recession. Maybe. ” Simply put, the outlook for the global economy is “more and more pessimistic,” he wrote.
The IMF has downgraded its global growth forecast from its April forecast, predicting that production will drop from 6.1% last year to 3.2% in 2022. Growth is expected to slow further next year as central banks around the world are raising interest rates to curb inflation.
Inflation is also rising faster and more extensively than the IMF expected earlier this year. Currently, prices are expected to rise 6.6% in developed countries and 9.5% in emerging and developing countries.
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Expected to be worried. With sustained high inflation, rising consumer prices and falling spending, the US economy is showing clear signs of a slowdown, fueling concerns about a potential recession. The other eight workarounds that indicate the above problem are:
“The risk to the outlook is overwhelmingly negative,” the IMF said.
The economic storm facing the world is a decline in consumer spending in the United States, the impact of Russia’s invasion of Ukraine on the European economy, and China’s Beijing continues to take harsh steps to contain the outbreak of the coronavirus. It is the result of the property crisis and blockade in. ..
The IMF emphasized that the forecast is exposed to considerable uncertainty and could be further downgraded. It pointed to the sudden outage of Russia’s gas flow to Europe, the stubborn persistence of inflation, and the prospect of a broader blockade in China as an imminent threat.
“In this scenario, both the US and the Eurozone will experience near-zero growth next year, negatively impacting the rest of the world,” Gourinchas said.
According to the report, the potential for a global recession is increasing. The probability of a recession in one of the seven developed countries’ groups is now close to 15%, four times higher than normal. He also said that some indicators suggest that the United States is already in a “technical” recession. This is defined by the IMF as negative growth for the second consecutive quarter.
Data released Thursday are expected to show that the US economy grew little or perhaps shrunk in the second quarter of 2022.
The Federal Reserve is expected to raise interest rates by three-quarters percentage points on Wednesday as it seeks to slow the economy and curb rapid inflation. The Federal Reserve aims for a “soft landing” that cools the economy well without a recession, but policymakers admit that it’s difficult to achieve.
Deteriorating economic outlook at home and abroad has caused problems for President Biden and his Democratic Party ahead of the midterm elections to decide who will rule Congress.
On Monday, Mr Biden argued that the United States was not in recession and its economy remained strong.
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“In my view, we won’t be in a recession,” he said, pointing out the low unemployment rate and expressing his hope that it would remain stable even as growth slowed. “God is happy and I don’t think we’re going to see a recession.”
I.MF. He noted that US growth was weaker than expected in the first half of this year, and that consumer spending was “significantly weakened” due to inflation and higher borrowing cost expectations.
With a twist, the IMF has downgraded most of its economies, while Russia’s economy is expected to shrink by 6% this year instead of the previously predicted 8.5%. The IMF said Russia’s oil and non-energy exports were holding up better than expected, and that Western sanctions did not have as many bites as expected.
“Domestic demand is also showing some resilience, thanks to containment of the effects of sanctions on the domestic financial sector and lower-than-expected weakening of the labor market,” the IMF report said.
