IMF Contradicts Yellen, Sees Dim Outlook For World Economy

At the start of the year, economists and corporate leaders expressed optimism that global economic growth might not slow down as much as they had feared.

Photo Insert: The IMF now expects economic growth to slow from 3.4% in 2022 to 2.8% in 2023. Its estimate in January had been for 2.9% growth this year.

Positive developments included China’s reopening, signs of resilience in Europe and falling energy prices, Julia Horowitz reported for CNN.

But a crisis in the banking sector that emerged last month has changed the calculus. The International Monetary Fund downgraded its forecasts for the global economy Tuesday, noting “the recent increase in financial market volatility.”

The IMF now expects economic growth to slow from 3.4% in 2022 to 2.8% in 2023. Its estimate in January had been for 2.9% growth this year.

“Uncertainty is high, and the balance of risks has shifted firmly to the downside so long as the financial sector remains unsettled,” the organization said in its latest report.

Fears about the economic outlook have increased following the failures in March of Silicon Valley Bank and Signature Bank, two regional US lenders, and the loss of confidence in the much-larger Credit Suisse (CS), which was sold to rival UBS in a government-backed rescue deal.

Already, the global economy was grappling with the consequences of high and persistent inflation, the rapid rise in interest rates to fight it, elevated debt levels and Russia’s war in Ukraine, Olesya Dmitracova also reported for CNN.

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