IMF Slashes Global Economic Growth Rate To 3.5%

The International Monetary Fund (IMF) on Tuesday (Wednesday, July 27, 2022, in Manila) projected global economic growth will slow to 3.2 percent in 2022, cutting the outlook by 0.4 percentage points from its April forecast as Russia's war against Ukraine drives up inflation worldwide and China's COVID-19 lockdowns lead to a worse-than-expected slowdown, Mainichi Japan reported.

Photo Insert: Russia's war against Ukraine has driven up inflation worldwide.

With the United States, China, and other major economies facing downgraded outlooks, Japan's growth in 2022 and 2023 was also expected to be 0.7 points and 0.6 points lower than earlier estimated as the latest figures showed 1.7 percent for both years, according to an update of the semiannual World Economic Outlook report.

Painting a gloomy picture for the global economy, IMF chief economist Pierre-Olivier Gourinchas told a press conference that the risks, including stubbornly high inflation, are "overwhelmingly tilted to the downside" and that "the world may soon be teetering on the edge of a global recession."

Downside risks discussed in the April report, which was released after Russia's invasion of Ukraine began in February, are now materializing including high energy, food and other prices, prompting the central banks of major advanced economies to raise policy interest rates faster than expected, Kyodo News also reported IMF as saying.

Global gross domestic product next year will only expand 2.9 percent, a 0.7-point downgrade. In 2021, the world economy grew 6.1 percent amid a recovery from the downturn caused by the coronavirus pandemic.

Projected growth for the US economy was revised down by 1.4 and 1.3 points in 2022 and 2023, respectively, to 2.3 percent and 1.0 percent, due to significantly reduced momentum in private consumption amid inflation and the expected impact of a steeper tightening in monetary policy, according to the IMF.

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