IMF Cuts Global Growth Forecast Again Amid Surging Inflation
July 26, 2022
The International Monetary Fund (IMF) has lowered its outlook for global economic growth for 2022 and 2023 once again, citing the impact that soaring inflation and the war in Ukraine are having on household purchasing power around the world and China’s slowing growth amid prolonged Cobid lockdowns.
The group now sees world economic growth slowing to 3.2% this year, much lower than the 6.1% expansion it projected in 2021. The IMF has repeatedly cut its forecast for 2022, from 4.9% in October, 4.4% in January, and 3.6% in April.
Growth is expected to further slow in 2023, and the IMF forecasts just 2.9% growth next year, a significant downgrade from the 3.6% expansion projected in April.
The IMF warned the actual growth levels could be even lower, noting the many downside risks currently facing the world economy. Among them are a sudden stop of European gas imports from Russia, entrenched inflation that persists even as monetary policy is tightened, and a further slowdown in China triggered by additional Covid lockdowns and the deterioration of its property sector.
The IMF noted that “the risks to the outlook are overwhelmingly tilted to the downside,” adding that global growth could be as low as 2.6% in 2022 and 2% in 2023.
The latest revision reflects high inflation expectations. The group now expects prices to climb by 6.6% in developed nations and 9.5% in emerging markets this year. That is an upward revision of 0.9% and 0.8% respectively from projections made as recently as April.
Current projections show inflation slowing to 5.7% in 2023 and then returning to pre-pandemic levels by the end of 2024.