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Whilst some are boasting about the number of jobs created in the US, the world is moving inexorably towards a full blow recession. Nero fiddling while Rome burns springs to mind.
Fund expects world growth of just 2.7% next year as chief economist warns of ‘darkest hour’ ahead
China’s zero-Covid policy and fragile housing market mean its economy is forecast to grow only 4.4% this year, well below Beijing’s 5.5% target © Mark R
Chris Giles and Colby Smith in Washington DC
The IMF has said there is a growing risk that the global economy will slide into recession next year as households and businesses in most countries face “stormy waters”.
China’s zero-Covid policy and fragile housing market, the need to raise interest rates to control inflation in advanced economies, and higher energy and food prices following Russia’s invasion of Ukraine will lower world economic growth from 3.2 per cent in 2022 to 2.7 per cent next year, the fund predicted.
The growth forecast for 2023 is the lowest for the year ahead that the IMF has published since 2001, apart from the years of the coronavirus pandemic and following the global financial crisis.
The fund’s economists judged that there was a greater than even chance that the world economy would perform worse than its central forecast and a 25 per cent chance that growth would fall below 2 per cent. That would represent global economic weakness seen only one year in 10 and only in 1973, 1981, 1982, 2009 and 2020 over the past half a century.
In an interview with the Financial Times, Pierre Olivier Gourinchas, the IMF’s chief economist, said there was as much as a 15 per cent chance global growth could fall below 1 per cent eventually. This level would likely meet the threshold of a recession and would be “very, very painful for a lot of people”.
“We are not in a crisis yet, but things are really not looking good,” he said, adding that 2023 would be the “darkest hour” for the global economy.
Financial turmoil, triggered by a shift into dollar assets, threatened to compound the economic threat.
“As the global economy is headed for stormy waters, financial turmoil may well erupt, prompting investors to seek the protection of safe-haven investments, such as US Treasuries, and pushing the dollar even higher,” Gourinchas added in his statement that accompanied the report.
Although the sharp rises in interest rates around the world were weighing on growth, the IMF said they were necessary to ensure inflation came back under control and restored the global economy to a more stable footing.
https://www.ft.com/content/30369662-554b-44b7-9f25-b87d5e13548d
Whilst some are boasting about the number of jobs created in the US, the world is moving inexorably towards a full blow recession. Nero fiddling while Rome burns springs to mind.
Fund expects world growth of just 2.7% next year as chief economist warns of ‘darkest hour’ ahead
China’s zero-Covid policy and fragile housing market mean its economy is forecast to grow only 4.4% this year, well below Beijing’s 5.5% target © Mark R
Chris Giles and Colby Smith in Washington DC
The IMF has said there is a growing risk that the global economy will slide into recession next year as households and businesses in most countries face “stormy waters”.
China’s zero-Covid policy and fragile housing market, the need to raise interest rates to control inflation in advanced economies, and higher energy and food prices following Russia’s invasion of Ukraine will lower world economic growth from 3.2 per cent in 2022 to 2.7 per cent next year, the fund predicted.
The growth forecast for 2023 is the lowest for the year ahead that the IMF has published since 2001, apart from the years of the coronavirus pandemic and following the global financial crisis.
The fund’s economists judged that there was a greater than even chance that the world economy would perform worse than its central forecast and a 25 per cent chance that growth would fall below 2 per cent. That would represent global economic weakness seen only one year in 10 and only in 1973, 1981, 1982, 2009 and 2020 over the past half a century.
In an interview with the Financial Times, Pierre Olivier Gourinchas, the IMF’s chief economist, said there was as much as a 15 per cent chance global growth could fall below 1 per cent eventually. This level would likely meet the threshold of a recession and would be “very, very painful for a lot of people”.
“We are not in a crisis yet, but things are really not looking good,” he said, adding that 2023 would be the “darkest hour” for the global economy.
Financial turmoil, triggered by a shift into dollar assets, threatened to compound the economic threat.
“As the global economy is headed for stormy waters, financial turmoil may well erupt, prompting investors to seek the protection of safe-haven investments, such as US Treasuries, and pushing the dollar even higher,” Gourinchas added in his statement that accompanied the report.
Although the sharp rises in interest rates around the world were weighing on growth, the IMF said they were necessary to ensure inflation came back under control and restored the global economy to a more stable footing.
https://www.ft.com/content/30369662-554b-44b7-9f25-b87d5e13548d
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