In its biannual World Economic Outlook, the International Monetary Fund says risks are now ‘heavily skewed’ to the downside
The IMF’s biannual World Economic Outlook, published Tuesday, left the fund’s global growth forecast largely unchanged. However it warned that risks to the outlook are now “heavily skewed” to the downside.
The publication launches the spring meetings of the IMF and World Bank in Washington. Finance ministers and central bankers, including Chrystia Freeland andGovernor Tiff Macklem, are also attending a meeting of the G20 in Washington this week. “The sharp policy tightening of the past 12 months is starting to have serious side effects for the financial sector,” Mr. Gourinchas wrote, referring to the rapid pace of interest rate hikes by many central banks around the world.
The report presents a “plausible alternative scenario,” where the stress in the banking sector leads to a more significant pullback in lending, as banks look to cut their exposure to risk. In this situation, global GDP would grow by only 2.5 per cent this year. The Bank of Canada will publish its own updated economic forecast on Wednesday alongside its interest rate announcement.
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