The International Monetary Fund expects global growth to slow to 2.7% next year, down 0.2% from its forecast in July this year. In addition, according to the fund’s forecasts, the year 2023 will feel like a recession for millions around the world due to a significant slowdown recorded by the world’s largest economies, such as the US, China and Europe.
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Beyond periods of economic crisis or the peak of the Corona epidemic, the IMF states that 2022 is “the weakest year of growth since 2001”, and that the global economy will grow by only 3.2% after growing in 2021 by 6%.
“The worst is yet to come and for many people, 2023 will really feel like a recession,” says the fund’s report, which echoes the warnings of many analysts and bank CEOs. According to the fund, more than a third of the world’s economies will record two consecutive quarters of negative growth, while the larger economies, Like the US, will continue to slow down significantly.
According to the report, three significant events weigh on global growth: the Russian invasion of Ukraine, the cost of living crisis and the economic slowdown in China. Together, these three factors create an economic, geopolitical and ecological “precarious period”, according to the fund.
The war in Ukraine adds to being a “significant force for instability in the global economy”, according to the report, when its effects led to a severe energy crisis in Europe. The price of natural gas has more than quadrupled since 2021, with Russia exporting less than 20% of its 2021 levels. Food prices also skyrocketed following the Russian invasion.
In further forecasts that are not encouraging, the fund expects that global inflation will reach its peak at the end of this year and rise from 4.7% in 2021 to 8.8%, and that this level “will remain higher for longer than we expected in the previous report.” Global inflation will likely rise to 6.5% next year.