The International Monetary Fund (IMF) has was warned of an imminent global recession that could be triggered by rising inflation across nations.
According to the IMF chief economist Pierre-Olivier Gourinchas. “The world may soon be teetering on the edge of a global recession, only two years after the last one.”
IMF downgraded its outlook for the global economy this year and next, while giving an even starker assessment of what may lie ahead.
This is largely attributed to the surging inflation and severe slowdowns in the world’s three largest economies: United States, China and Europe
In its latest World Economic Outlook, the International Monetary Fund cut the 2022 global GDP estimate to 3.2 percent, four-tenths of a point lower than the April forecast, and about half the rate seen last year.
According to IMF; “Last year’s recovery from the pandemic downturn has been followed by increasingly gloomy developments in 2022 as risks began to materialize”
“Several shocks have hit a world economy already weakened by the pandemic,” including the war in Ukraine which has driven up global prices for food and energy, prompting central banks to raise interest rates sharply.
Ongoing Covid-19 lockdowns and a worsening real estate crisis have hindered economic activity in China, while the Federal Reserve’s aggressive interest rate hikes are slowing US growth sharply.
Key among concerns is the fallout from the Ukraine war including the potential for Russia to cut off natural gas supplies to Europe, as well as a further spike in prices and the specter of famines due to the war’s chokehold on grain supplies”.