IMF Downgrades Growth Outlook, Warns: ‘The Worst is Yet to Come’

October 11, 2022

The International Monetary Fund (IMF) has once again slashed its outlook for the global economy, warning that “the worst is yet to come, and for many people, 2023 will feel like a recession.”

The latest outlook is projecting growth of 2.7% in 2023, down from 3.2% this year and 6% in 2021. This is a reduction of 0.2% from the previous forecast made in July. The multinational lending agency estimates a 25% probability that growth could fall below 2% next year. 

The IMF attributes the lower outlook to persistently high inflation, Russia’s invasion of Ukraine, and the economic slowdown in China caused by frequent Covid-19 lockdowns and the nation’s beleaguered property sector.

The IMF projections for the global economy in 2023 are the third weakest since the beginning of the century, behind only the 2008 financial crisis and the beginning of the coronavirus pandemic. If growth does fall below 2%, it will be only the sixth time since 1970 that it has done so. 

The IMF does expect global inflation to peak later this year, but warns that it will likely “remain elevated for longer than previously expected.”

Economies representing more than one-third of global economic output are expected to contract next year, while growth among the world’s three largest economies—the U.S., China, and the E.U.—is expected to stall.

The IMF left its 2023 U.S. growth projection unchanged at 1%, but did slash its 2022 forecast once again. The group now expects the U.S. economy to expand 1.6% this year, down from its 2.3% estimate in July, and down significantly from 5.7% last year.

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