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