The International Monetary Fund on Tuesday downgraded its global growth projections amid growing inflation, The New York Times reports.
The IMF released its World Economic Outlook report, warning of “stormy waters” ahead for the world economy and a potential global recession.
“In short, the worst is yet to come, and for many people 2023 will feel like a recession,” the report said.
The IMF projects that the economy would grow by 3.2% this year but now says it is expected to slow to 2.7% next year.
The group previously projected 4.4% global economic growth this year and 3.8% in 2023.
Global inflation is expected to peak at 8.8% this year and decline to about 6.5% next year, according to the report.
“The risks are accumulating,” IMF chief economist Pierre-Olivier Gourinchas told the Times. “We’re expecting about a third of the global economy to be in a technical recession.”
The IMF defines a “technical recession” as an economy that contracted two quarters in a row.
JP Morgan Chase chief Jamie Dimon similar predicted that the US will likely be “in some kind of recession six to nine months from now.”
Though moves by central banks to battle inflation raise the risks of a recession, the IMF similarly warned that doing too little to combat growing prices could be more costly later.
Poor hurt most:
Economic slowdowns across the world are already hurting developing countries most just as they face huge debts after the pandemic.
Experts warn that rising interest rates, growing food costs, and decreasing demands for exports threaten to push millions more into poverty.
“The poor are hurt the most,” David Malpass, the president of the World Bank, told reporters. “We’re in the midst of a crisis-facing development.”