Washington, Jul 26 (EFE).- The International Monetary Fund on Tuesday cut its global economic growth forecasts for 2022 and 2023 due to heightened global instability.
Global growth is now set to cap out at 3.2% this year and 2.9% in 2023 after the IMF downgraded its April outlook by 0.4% and 0.7% respectively.
The world’s major economic blocs, China, the United States and the eurozone are all set to have lower economic growth than previously estimated.
“A tentative recovery in 2021 has been followed by increasingly gloomy developments in 2022 as risks began to materialize,” the IMF report said.
In the July update to the World Economic Outlook, the IMF said the bleak forecast reflected downturns in Russia and China, lower than expected consumer spending in the US, high inflation — especially in the US and Europe — and the continued fallout of Russia’s Ukraine invasion.
The US economy was downgraded by 1.4% to 2.3% growth in 2022 and by 1.3% to just 1% in 2023 while China’s is set to grow 3.3% this year and 4.6% in 2023, a drop of 1.1% and 0.5% respectively.
In an even gloomier section of its update, the IMF outlined the possibility of global economic growth slumping to just 2.6% in 2022 and 2% in 2023, which would equate to the bottom 10% of forecasts since 1970.
The risk factors that could pull the global economy this low include a total stoppage of Russian gas supplies to Europe, failure to restrain inflation rates, debt crises in developing nations and fresh outbreaks of Covid-19, the report said.
Policymakers must focus their efforts on containing inflation as a priority, the report suggested. EFE