IMF downgrades 2023 world economic outlook over protracted Russia- Ukraine war

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The IMF cut its outlook for economic growth in the United States to 1.6 per cent this year, down from a July forecast of 2.3 per cent. It expects meager one per cent U.S. growth in 2023.

International Monetary Fund Managing Director Kristalina Georgieva speaks before introducing a panel discussion at the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group, Monday, October 10, 2022, in Washington.

The IMF is downgrading its outlook for the world economy for 2023, citing a long list of threats that include Russia’s war against Ukraine, chronic inflation pressures, punishing interest rates and the lingering consequences of the global pandemic.

The 190-country lending agency forecast Tuesday that the global economy would eke out growth of just 2.7 per cent next year, down from the 2.9 per cent it had estimated in July. The IMF left unchanged its forecast for international growth this year — a modest 3.2 per cent, a sharp deceleration from last year’s six per cent expansion.

The bleaker forecast was no surprise. IMF Managing Director Kristalina Georgieva, noting the grim backdrop to this week’s fall meetings of the IMF and the World Bank in Washington, warned that the “risks of recession are rising” around the world and that the global economy is facing a “period of historic fragility.”

In its latest estimates, the IMF cut its outlook for growth in the United States to 1.6% this year, down from a July forecast of 2.3 per cent. It expects meager one per cent U.S. growth next year.

The fund foresees China’s economy growing just 3.2 per cent this year, down drastically from 8.1 per cent last year. Beijing has instituted draconian zero-COVID policy and has cracked down on excessive real estate lending, disrupting business activity. China’s growth is forecast to accelerate to 4.4 per cent next year, still tepid by Chinese standards.

In the IMF’s view, the collective economy of the 19 European countries that share the euro currency, reeling from crushingly high energy prices caused by Russia’s attack on Ukraine and Western sanctions against Moscow, will grow just 0.5% in 2023.