The global economy will grow more slowly than previously assumed. The IMF announced on Tuesday. The IMF cited the Ukraine war and inflation as reasons.
According to the International Monetary Fund (IMF), the sluggish economic development in China and the USA is leading to slower economic growth worldwide. The IMF lowered its global growth forecast for the current year to 3.2 percent, as the organization announced in Washington on Tuesday. In April, the IMF was still expecting global economic growth of 3.6 percent. The IMF warned that the economic outlook could continue to deteriorate.
The IMF also lowered the growth forecast for Germany significantly. He only expected economic growth of 1.2 percent for the current year – in April he had predicted 2.1 percent. For the coming year, the Monetary Fund has lowered its forecast for Germany by 1.9 percentage points to 0.8 percent compared to April.
“Various shocks have hit the global economy, already weakened by the impact of the pandemic,” the IMF said. Above all, the war in Ukraine is having a negative impact on growth. The Russian attack on the neighboring country has led to high energy and food prices, driving up inflation.
Many of the risks that the IMF had already warned about in April have become more concrete, wrote its chief economist Pierre-Olivier Gourinchas in a supplementary blog article. The world could soon be “on the brink of a global recession just two years after the last one,” he warned.
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The lowered growth forecast reflects slower growth in the three largest economies: the US, China and the eurozone. This has “serious effects” on the global economy, the expert emphasized.
According to the IMF, the prospects for the coming year have also clouded over significantly: the IMF has revised its global growth forecast for 2023 downwards by 0.7 points to 2.9 percent. The main reason for this is the high inflation. The organization warned that this could rise even further if there were a complete stop to the supply of Russian gas.
However, the fight against inflation could prove to be “more expensive than expected”, the IMF warned. The risk of a recession is particularly high in the coming year. Highly indebted countries in particular would also be additionally burdened by the rise in key interest rates worldwide.
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