Global economic growth is likely to slow next year more than previously expected, the International Monetary Fund said, warning living conditions will worsen as soaring inflation harms people’s lives around the world.
The IMF attributed the weaker outlook primarily to the effects of inflation, Russia’s invasion of Ukraine and the slowdown in China brought on by frequent Covid-19 lockdowns and problems in its property sector.
Inflation, at the highest rates in decades, poses the most significant immediate threat to the global economy by squeezing incomes and destabilizing economic activities, said IMF economists.
The IMF expects global inflation to peak this year at 8.8%, before cooling to 6.5% in 2023 and 4.1% in 2024. At 7.2%, inflation in advanced economies this year is the highest since 1982.
The U.S. Federal Reserve is raising interest rates at the fastest clip in decades to try to tame inflation by slowing growth. Central banks around the world are rapidly moving in the same direction.
Further, The IMF, citing in its latest World Economic Outlook report, cut its forecast for India’s gross domestic product (GDP) growth in financial year 2022-23 (FY23) by 60 basis points (bps) to 6.8 per cent, warning of a long and tough economic winter.