IMF warns it will cut global growth forecast again with ‘darkened’ outlook

The IMF logo as seen outside the headquarters building in Washington

The International Monetary Fund warned it will again cut the forecast for global economic growth as impacts reverberate from Russia’s invasion of Ukraine, pandemic-related shutdowns in China and higher inflation.

The outlook for this year and next will be downgraded later this month when the IMF releases its World Economic Outlook Update, Managing Director Kristalina Georgieva wrote in a blog post published Wednesday, without providing specific figures.

“The outlook remains extremely uncertain,” she wrote. “It is going to be a tough 2022 -- and possibly an even tougher 2023, with increased risk of recession.”

The global recovery from the pandemic has been compromised by surging commodities prices on the back of the Ukraine war and a slowdown in China amid sustained Covid-19 restrictions. Stronger inflation is also forcing policy makers to raise interest rates, moves aimed at cooling price growth but that risk tipping economies into recessions.

The IMF’s warning follows its April downgrade for global expansion this year to 3.6%, from 4.4% seen before the war in Ukraine. It also comes ahead of a meeting later this week of finance ministers and central bankers from the Group of 20.

“The global economic outlook has darkened considerably, while inflation remains high,” the IMF said in a related note, adding that recent indicators point to a “very weak” second quarter.

Georgieva’s comments on gross domestic product come a day after she raised the alarm on a global debt crisis in the making as central banks raise interest rates to curb inflation, increasing debt-servicing costs for vulnerable nations.

Separately on Tuesday, the IMF downgraded its forecast for US gross domestic product this year and next, warning that a surge in inflation poses “systemic risks” to both the country and the global economy.