Is A Global Recession Coming?

In an interview with Reuters, International Monetary Fund Chief, Kristalina Georgieva, were asked if she could rule out a global recession, to which she replied, “The risk has gone up so we cannot rule it out.”

“The outlook since our last update in April has darkened significantly,” she told Reuters in an interview, citing a more universal spread of inflation, more substantial interest rate hikes, a slowdown in China’s economic growth, and escalating sanctions related to Russia’s war in Ukraine.

Recent economic data showed some large economies, including those of China and Russia, had contracted in the second quarters, she said, noting the risks were even higher in 2023. “It’s going to be a tough 2022, but maybe even a tougher 2023,” she said. 

Pierre-Olivier Gourinchas, economic counselor and director of research at IMF, further added that inflation this year is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies. Inflation has also broadened in many economies, reflecting the impact of cost pressures from disrupted supply chains and historically tight labour markets.

“The world may soon be teetering on the edge of a global recession, only two years after the last one,” wrote Pierre-Olivier Gourinchas in a recent blog.

Source:

• IMF, World Economic Outlook Update

• Reuters