IMF adds: “A plausible alternative scenario in which risks materialize, inflation rises further, and global growth declines to about 2.6 percent and two percent in 20, respectively, would put growth in the bottom 10 percent of outcomes since 1970.” “The war in Ukraine could lead to a sudden stop of European gas imports from Russia inflation could be harder to bring down than anticipated either if labor markets are tighter than expected or inflation expectations unanchor tighter global financial conditions could induce debt distress in emerging market and developing economies renewed outbreaks and lockdowns as well as a further escalation of the property sector crisis might further suppress Chinese growth and geopolitical fragmentation could impede global trade and cooperation,” it said. IMF also noted that the risks to the outlook are overwhelmingly tilted to the downside.
However, for the ASEAN 5 which includes Indonesia, Malaysia, the Philippines, Singapore and Thailand, IMF projects growth (in terms of real GDP) to increase from 3.4 percent in 2021 to 5.3 percent this year and then to slow down to 5.1 percent next year. In 2023, IMF expects disinflationary monetary policies to bite, with global output growing by only 2.9 percent. Meanwhile, global inflation has been revised up due to food and energy prices as well as lingering supply-demand imbalance and is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies this year.
The IMF said that growth is forecasted to decline from 6.1 percent last year to 3.2 percent in 2022, or 0.4 percentage point lower than what was projected in its April report. In its World Economic Report last July, the International Monetary Fund (IMF) revealed that global output contracted in the second quarter of this year as several shocks hit the world economy already weakened by the pandemic – higher than expected inflation worldwide especially in the US and major European economies triggering tighter financial conditions, a worse than anticipated slowdown in China reflected COVID 19 outbreaks and lockdowns, and further negative spillover from the war in Ukraine. The conflict may just be between Russia and Ukraine and their backers, but almost every country is feeling the impact.
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