The International Monetary Fund (IMF) lowered its expectations for global economic forecast, in a report on Tuesday, igniting fears of a global recession. The IMF expects the world economy to grow just by 3.2% this year and 2.9% next year, this is only slightly above the 2.5% threshold that is considered a global recession.
The global downturn is due to the predicted major slowdowns in the world’s three biggest economies – the United States, China, and Europe. This combined with the ongoing war in Ukraine, inflation increasing faster than expected, and stricter monetary policy in the world has exacerbated the impact on an already fragile global economy.
The current forecast assumes that things will remain as it is which is unlikely given fears of Russia potentially shutting off the flow of gas to Europe. That would send the inflation surging even higher causing the global economy to tumble further this year. IMF warns, that in that scenario, a global recession would be likely with growth falling to just 2%.
Pierre-Olivier Gourinchas, the IMF’s director of research, said in a blog post on Tuesday, “The outlook has darkened significantly. The world may soon be teetering on the edge of a global recession, only two years after the last one.”
