Business Maverick: IMF Warns ‘Worst is Yet to Come’ as Steps to Slow Inflation Raise Risks

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The International Monetary Fund warned of a worsening outlook for the global economy, highlighting that efforts to manage the hottest inflation in decades may add to the damage from the war in Ukraine and China’s slowdown.

The IMF cut its forecast for global growth next year to 2.7%, from 2.9% seen in July and 3.8% in January, adding that it sees a 25% probability that growth will slow to less than 2%.

Excluding the unprecedented slowdown of 2020 because of the coronavirus pandemic, next year’s performance would be the weakest since 2009, in the wake of the global financial crisis. To be sure, the IMF sees greater risk from central banks doing too little rather than too much amid persistent price pressures, a mistake that would cost them credibility and only increase the eventual cost to bring prices under control.

The euro area economy will grow just 0.5% in 2023, according to the fund, with the bloc seeing the sharpest outlook reduction among global regions. Germany, Italy and Russia all will see their economies shrink.

 

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