IMF: Massive downgrades in global growth, global output forecasts

By Al Mayadeen English
Source: Agencies
6 Oct 2022 17:45
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The IMF is considering that the entire economy will suffer in the year 2023, but the reality is that the downgrades will only apply to Western countries.

IMF director: Forecast for Global Growth in 2023 to be downgraded

IMF Managing Director Kristalina Georgieva said on Thursday that the International Monetary Fund (IMF) will downgrade its global economic forecast for 2023 in an upcoming World Economic Outlook to be released next week.

During a speech before the upcoming meetings between the IMF and the World Bank, "As you will see in our updated World Economic Outlook next week, we will downgrade growth for next year."

Georgieva added that the IMF expects one-third of the global economy to undergo a recession in the year 2023.

Forecasts further predict for the global output to decline by about $4 trillion between now and 2026, Georgieva said.

“Overall, we expect a global output loss of about $4 trillion between now and 2026. This is the size of the German economy — a massive setback for the world economy,” Georgieva stated during her speech today.

"We will flag that the risks of recession are rising. We estimate that countries accounting for about one-third of the world economy will experience at least two consecutive quarters of contraction this or next year. And, even when growth is positive, it will feel like a recession because of shrinking real incomes and rising prices," she added while warning against a rapid tightening of monetary policy.

"Tightening monetary policy too much and too fast—and doing so in a synchronized manner across countries—could push many economies into prolonged recession," Georgieva concluded.

The situation is likely to further worsen as the EU is continuing to sanction Teheran and Moscow. Just yesterday, the EU agreed to impose a price cap on Russian oil sales to third countries, in an attempt to block Moscow's use of EU-registered vessels for its oil exports, all while excluding pipeline deliveries from the 8th round of sanctions on Russia, Politico Europe reported on Tuesday.

This decision was passed despite Cyprus, Malta, and Greece's opposition which had previously voiced their concern on the matter due to its impact on the shipping industry in the countries, and have been promised concessions by Brussels that proposed measures induced through a "monitoring system" to help ease the effects of the embargo that might emerge as a "significant loss of business" if commercial vessels were to resort to reflagging.

On Wednesday, Iranian Deputy Energy Minister Ahmad Asadzadeh told Sputnik that the West, having imposed sanctions against Tehran and Moscow, suffered from these sanctions itself and faced an energy crisis.

"Now the world needs gas and oil. It would be good to treat this topic carefully, to take a transparent position. Sanctions against Iran and Russia are not good for the West, it will suffer from them. Today there is a gas crisis in Europe, there are problems. The same is true for oil," Asadzadeh explained.

On October 5th, OPEC+ member states voted on cutting their production of oil and agreed to reduce their oil production by 2 million barrels a day in light of the world's surging energy crisis.

Earlier reports suggested that OPEC's Joint Ministerial Committee (JMMC) recommended cutting oil production by 2 million barrels per day.

"They have not formally agreed yet, but have already voted," the source said, commenting on whether the alliance has agreed on a decision to reduce oil production by 2 million barrels per day.

The sources clarified that all members voted in favor of the reduction after discussing oil market reports.

The US is concerned that OPEC's probable decision to reduce oil production will pose serious problems for the country and may even be interpreted as a hostile act, according to a US Treasury report.

The Biden administration assembled its top energy, economic, and foreign policy officials and entrusted them with lobbying Middle East allies such as Saudi Arabia, the United Arab Emirates, and Kuwait to vote against decreasing oil production.

To persuade its OPEC allies, the US proposed to purchase back up to 200 million barrels of oil from its OPEC partners.