The IMF warned in its latest major global economic outlook report. Inflationary pressure leading to interest rate hikes Mixed plant energy and food price crisis It is causing the global economy to enter a recession and threatens financial market stability. Countries representing one-third of global output could fall into this situation next year. The world’s three big economies – the United States, China and the EU – have all slowed.
In a report released on Tuesday (Oct. 11), the start of the annual meeting for the fall semester, of the International Monetary Fund (IMF) and the World Bank. It continues to fight inflation despite the painful consequences of tighter monetary policy. The dollar, meanwhile, rose to a record in two years, following a sharp hike in interest rates by the Federal Reserve as well, two of the main factors driving global financial markets volatility recently.
IMF report The global economic growth forecast for 2023 was revised down to 2.7% from the 2.9% expected in an earlier updated report in July. in the midst of an unfamiliar situation The Fed’s strong interest rate hike caused the American economy to slow down. Europe has to deal with soaring energy prices. And China continues to use lockdown measures to curb the coronavirus as the real estate sector stagnates.
Pierre-Olivier Gurinchas, chief economist at the IMF, said the country representing one-third of global output could enter a recession next year. Meanwhile, the growth of the world’s three largest economies – America, China and the European Union (EU) – will continue to slow down. In summary, it is For many people The worst was yet to come. And you may feel that 2023 is the year of the recession.
For this year, the IMF kept its global economic growth forecast at 3.2%, reflecting the unexpected growth in European output. while America’s growth slowed Compare that to a high growth rate of 6% last year after the coronavirus crisis subsided.
The IMF report added that Some big European countries will enter a technical recession next year. This includes Germany and Italy. while energy prices skyrocket and production shortages
At the same time, China’s growth trend is downgraded. from maintaining lockdown measures to prevent covid and a sluggish real estate sector that will further slow China’s growth.
The IMF report also said that Growing economic pressures coupled with tight liquidity Inflation showing no signs of declining and prolonged financial volatility This increases the risk that asset prices will adjust in a chaotic manner and cause the unstable situation in the financial markets to escalate.
Treasury officials from 190 member states of the IMF and the World Bank this week. Let’s meet in Washington to find out how to deal with these uncertainties. As they have different economic stances. They also faced the food and energy price crisis as a result of the Ukrainian war. and other global challenges This includes the need for large funding for clean energy development.
The IMF pointed out that Central banks must try to walk a middle path in fighting inflation without the overly tight monetary policy that could unnecessarily push the global economy into a severe recession. And it adds to the pain of emerging market economies who are seeing their currencies tumble against the dollar.
However, Gurinchas emphasized that However, controlling inflation is more important. and reducing the card too fast It could undermine the credibility that the central bank has had a hard time gaining.
The World Bank expects Global inflation will peak at 9.5% in the third quarter of this year and drop to 4.7% in the final quarter of next year.
However, the outlook for the global economy could be much darker if faced with multiple impacts at the same time. This includes a 30 percent rise in oil prices from current levels that will slash global economic growth by 1% next year.
other negative factors The downtrend also includes financial tightening due to currency depreciation in emerging markets. and an overheating labor market that has reduced productivity.
Gurinchas warned that The global economy could have avoided a recession, but there is a one in four chance that growth could drop to 2% or lower, which has happened only five times since 1970, such as the 1973 oil crisis, a slowdown in inflation. Down in 1981, and the 2008 financial crisis all had a huge impact on the global economy.
(Source: AFP, Archyde.com)