IMF cuts global growth outlook as interest rates, inflation rise

The International Monetary Fund (IMF) cut its global growth outlook for this year and next, warning that the world economy may soon be on the cusp of an outright recession.

Global economic expansion will likely slow to 3.2 per cent this year, less than the 3.6 per cent forecast by the fund in April and the 4.4 per cent seen in January, the IMF said in an update to its World Economic Outlook released yesterday.

The series of interest rate increases that central banks have unleashed to contain inflation “is expected to bite” in 2023, with global output growth set to slow to 2.9 per cent, it said.

While the crisis lender is still forecasting positive growth, that will do little to quell rising concern of receding expansion or even outright recession in major economies as accelerating price increases eat away at incomes, savings and profits.

“The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one,” said Mr PierreOlivier Gourinchas, the IMF’s chief economist, in a blog accompanying the release of the update.