IMF now expects the world economy to grow 3.2% in 2022 before slowing to a 2.9% GDP rate in 2023 — marking a downgrade of 0.4 and 0.7 percentage points, respectively, from its April forecasts. The Washington-based institute said the revised outlook indicated the downside risks outlined in its earlier report were now materializing. Those include soaring global inflation, China’s slowdown and the war in Ukraine. “The world may soon be teetering on the edge of a global recession,” IMF Chief Economist Pierre-Olivier Gourinchas said.
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The anticipated slowdown would mark the first quarterly contraction in global real GDP since 2020. A “plausible” but less likely alternative scenario could see global growth fall to around 2.6% in 2022 and 2.0% in 2023, IMF said, putting global growth in the bottom 10% of outcomes since 1970.
Worsening growth prospects in the U.S., China and India drove IMF’s downward revisions. The U.S. GDP outlook was lowered 1.4 percentage points to 2.3%, driven be weaker-than-expected growth in the first half of 2022, reduced household purchasing power and tightening monetary policy. China’s economy is now expected to grow 3.3% in 2022 — down 1.1 percentage points from the previous forecast and its lowest clip in four decades, barring the initial fallout from the Covid-19 crisis in 2020.
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