A global recession is not out of the question, IMF warns
Inflation risks are likely to intensify for the foreseeable future, posing significant dangers for G7 economies, according to the International Monetary Fund.
Inflation is likely to reach 8.3% this year and 5.7% in 2023, the IMF predicted. This will accompany a much slowed rate of global real GDP growth of 3.2% this year and 2.9% in 2023.
The main drivers will be downside risks from the Russo-Ukrainian War, which will aggravate the impact of elevated inflation rates – factors that might lead to a possible global recession, the IMF warned.
“The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one,” said Pierre-Olivier Gourinchas, chief economist at the IMF.
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“We are in a very critical moment here,” he added. “It’s easy to cool off the economy when the economy is running hot. It’s much harder to reduce inflation when the economy is close to a recession. … It doesn’t take much to knock the economy off into something that you might call a technical recession.
“Inflation at current levels represents a clear risk for current and future macroeconomic stability and bringing it back to central bank targets should be the top priority for policymakers.”
