IMF to slash global growth forecast 'substantially' in next update

By Al Mayadeen English
Source: Bloomberg
17 Jul 2022 18:09

A broken supply chain, the pandemic, central bank policies, and the ongoing global inflation all play a role in the significant reduction the IMF will make in its upcoming update.

IMF is looking at a significant reduction in its global growth forecast

International Monetary Fund (IMF) Director for Strategy, Policy, and Review, Ceyla Pazarbasioglu, said the IMF is looking at a significant reduction in its global growth forecast in the next update.

“It’s shock after shock after shock which are really hitting the global economy,” Pazarbasioglu said at a Sunday panel in Bali, Indonesia. The Director stressed that the Covid pandemic, the continuously soaring prices for food and energy, a downturn in capital flows to emerging markets, along with a slowdown in China make it “much more challenging” for policymakers to come up with an effective economic strategy.

In a review due later this month, “we will downgrade our forecast substantially,” Pazarbasioglu said.

Earlier, in the April IMF report, the global growth outlook was slashed from 4.4% to 3.6% as a consequence of the rising inflationary risks and the aggressive tightening by the central bank.

To know more: IMF may lower forecast for global economic growth in July - Spokesman

Hyun Song Shin, head of research at the Bank for International Settlements, according to Bloomberg, said at the same panel in Bali that “the path to a soft landing is narrowing; we think it is still a feasible path but certainly not a very easy one,” adding that “where central banks take monetary policy in a rapid and decisive manner and have a front-loaded response to inflation, that is more conducive to a soft landing,” the expert added.

Global monetary authorities are finding it difficult to control rising prices brought on by supply problems that have existed since the pandemic's early beginnings.