US: The global economic outlook has “darkened significantly” and could deteriorate further, the IMF’s managing director said Wednesday, citing Russia’s war in Ukraine and the rapid inflation it has caused, threatening widespread hunger and poverty.
The warning comes just months after the IMF already cut its global growth forecast for 2022 and 2023.
The Ukraine war hit as the world was struggling to recover from the ongoing impact of the Covid-19 pandemic, and has caused an acceleration of inflation that endangers the gains of the past two years.
The international crisis-lender is “projecting a further downgrade to global growth” in 2022 and 2023, Kristalina Georgieva said in a blog post published ahead of the meeting of G20 finance ministers and central bankers, scheduled for Friday and Saturday in Bali.
“It is going to be a tough 2022 — and possibly an even tougher 2023, with increased risk of recession,” she wrote.
The IMF is due to release its updated World Economic Outlook later this month, which Georgieva said will further downgrade the estimate for global growth from the April estimate of 3.6 percent.
“We warned this could get worse given potential downside risks. Since then, several of those risks have materialized — and the multiple crises facing the world have intensified,” she said.
The outlook remains “extremely uncertain,” and Georgieva warned that the poorest will be hit the hardest.
But Georgieva said fighting the price surge is critical, despite the recession risk.“Acting now will hurt less than acting later.”
Georgieva stressed the top priorities were bringing down inflation, including through government spending cuts that would aid central bank efforts.
– THE STATESMAN