IMF is poised to downgrade its outlook for 2022 and 2023 as Russia’s war in Ukraine darkens the economic outlook
Nusa Dua — The global economic outlook remains extremely uncertain, the head of the International Monetary Fund said on Wednesday, warning that further disruption in the natural gas supply to Europe could plunge many economies into recession.
Last week, Georgieva said the fund would scale back its previous forecast for 3.6% growth in 2022 for the third time this year and said she could not rule out a recession in 2023. New numbers are due out later in July, after a downward revision of nearly a full percentage point in April. “Countries must do everything in their power to bring down high inflation ... because persistently high inflation could sink the recovery and further damage living standards, particularly for the vulnerable,” she said, adding that rising concerns over food and energy supplies also elevated the risks of social instability.
Most central banks would need to continue to tighten monetary policy decisively, especially in countries where inflation expectations were starting to de-anchor. Without action, she said, those countries could face a “destructive wage-price spiral” that would require more forceful monetary tightening, with even more harm to growth and employment.
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