The International Monetary Fund (IMF) said on Sunday that the future for the global economy is even more gloomy than what was forecast a month ago. As evidence, the IMF cited a persistent deterioration in purchasing manager surveys over the last several months.
The report placed the blame for the gloomier forecast on the tightening of monetary policy brought on by persistently high and broad-based inflation, sluggish economic momentum in China, and persisting supply disruptions and food shortages brought on by Russia’s invasion of Ukraine.
The international financial institution revised its growth prediction for the world economy for 2023 down to 2.7% from 2.9% in the previous month.
The International Monetary Fund (IMF) said in a blog post that new high-frequency data “suggest that the outlook is gloomier,” especially in Europe. This statement was prepared for a conference of G20 leaders in Indonesia.
According to the report, recent purchasing manager indices, which measure the level of activity in manufacturing and services, pointed to weakness in the majority of the major economies that make up the Group of 20, with economic activity expected to decrease while inflation remained stubbornly high.
According to the International Monetary Fund (IMF), “readings for a rising number of G20 nations have moved from expansionary territory earlier this year to levels that imply contraction.” The IMF said that global fragmentation contributed to “a convergence of negative risks.”
The International Monetary Fund (IMF) said that the problems that the global economy is now experiencing are enormous, and that worsening economic indicators point to greater issues in the future. The IMF also stated that the present policy climate was “unusually unclear.”
A deepening of the energy crisis in Europe would have a significant negative impact on economic development and would boost inflation. Prolonged high inflation might compel larger-than-anticipated increases in policy interest rates as well as further tightening of global financial conditions.
The International Monetary Fund (IMF) said that this resulted in “growing risks of a sovereign debt crisis for vulnerable nations.”
According to the report, more extreme weather occurrences will also be detrimental to development around the world.