The International Monetary Fund (IMF) on Tuesday downgraded its 2023 world economic outlook, citing Russia’s ongoing war against Ukraine, widespread inflationary pressures and higher interest rates boosting borrowing rates for both businesses and consumers.
The 190-nation lending agency said it expects a meager 2.7% global growth rate next year, down from the 2.9% it projected in July. The IMF left its 2022 prediction unchanged, a modest 3.2% figure that would be only slightly more than half of last year’s 6% growth.
Aside from the peak of the COVID-19 pandemic in 2020, the regulator said it is “the weakest growth profile since 2001.The worst is yet to come, and for many people, 2023 will feel like a recession.”
More than a third of the global economy will see two consecutive quarters of negative growth in the coming year, the lender predicted.
IMF Managing Director Kristalina Georgieva, speaking at the IMF and the World Bank meeting in Washington, warned that the “risks of recession are rising” around the world and that the global economy is facing a “period of historic fragility.”
With economic uncertainty and rapid consumer price increases in the U.S., the regulator cut its predicted growth for the American economy to 1.6% this year, down from the July projection of 2.3%. The IMF said it is expecting only 1% U.S. growth next year.
Throughout the world, the Washington-based lender said it is expecting consumer prices to increase by 8.8% this year, up from 4.7% in 2021.
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