Citing a steady worsening in purchasing manager surveys in recent months, the International Monetary Fund (IMF) on Sunday said the global economic outlook is even gloomier than the last month’s projection.Global economic growth prospects are confronting a unique mix of headwinds, including Russia’s invasion of Ukraine, interest rate increases to contain inflation and lingering pandemic effects such as China’s lockdowns and disruptions in supply chains, according to a blog prepared for G20 leaders’ Summit in Indonesia.
IMF’s latest World Economic Outlook, released last month, lowered the global growth forecast for next year to 2.7% from the 2.9% estimated earlier. It expected countries accounting for more than a third of global output to contract during part of this year or next. “Moreover, as we discuss in our latest report prepared for the Group of Twenty, recent high-frequency indicators confirm that the outlook is gloomier,” the IMF blog cautioned.Despite growing evidence of a global slowdown, policymakers should continue to prioritise containing inflation, which is contributing to a cost-of-living crisis, hurting low-income and vulnerable groups the most. “As our G20 report emphasises, the macroeconomic policy environment is unusually uncertain,” it said.“However, continued fiscal and monetary tightening is likely needed in many countries to bring down inflation and address debt vulnerabilities — and we do expect further tightening in many G20 economies in the months ahead. Nonetheless, these actions will continue to weigh on economic activity, especially in interest-sensitive sectors such as housing,” it said.
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It noted that the challenges that the global economy is facing are immense and weakening economic indicators point to further challenges ahead. However, with careful policy action and joint multilateral efforts, the world can move toward stronger and more inclusive growth.
