IMF: Even more pessimistic is the outlook for the development of the global economy

THE outlook for the development of the global economy is even more pessimistic from the previous month’s forecast, as announced yesterday, Sunday, the International Monetary Fund citing a steady deterioration in the course of purchasing power over the past months, as recorded in surveys of business executives.

The IMF attributed the pessimistic assessment of the global economy to tight monetary policy caused by the rising path of broad-based inflation, weak growth momentum in China, ongoing problems in supply chains, and food insecurity that caused by Russia’s invasion of Ukraine.

The IMF last month cut its estimate for global growth in 2023 to 2.7% from a previous forecast of 2.9%.

In a blog post prepared for a G20 leaders’ conference in Indonesia, the IMF said recent high-frequency indicators “confirm that the outlook is even more pessimistic”, particularly in Europe.

According to the IMF, the content of recent surveys of business executives on the path of purchasing power that determine industrial production and service supply activities, signal the sign of weakness in most of the largest economies of the countries of the G20 group, with the economic activity to shrink, while inflation remains stubbornly high.

A worsening of the energy crisis in Europe could severely damage economic growth and increase inflation, while prolonged high inflation is likely to cause larger than expected increases in interest rates, as well as further tightening of economic conditions globally.

Such a development, on the other hand, initiates “increased risks for a debt crisis in countries with vulnerable economies”, according to the IMF.

Also, the ever-increasing extreme weather events could hurt economic growth at the global level, as estimated by the IMF.

RES-EMP

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