THE outlook for the world economy this year has dimmed in the face of chronically high inflation, rising interest rates and uncertainties resulting from the collapse of two big American banks.
That’s the view of the International Monetary Fund, which on Tuesday downgraded its outlook for global economic growth. The IMF now envisions growth this year of 2.8%, down from 3.4% in 2022 and from the 2.9% estimate for 2023 it made in its previous forecast in January.
The fund said the possibility of a “hard landing,” in which rising interest rates weaken growth so much as to cause a recession, has ”risen sharply,” especially in the world’s wealthiest countries. Those conditions are also increasing the risks to global financial stability, the fund warned.
“The situation remains fragile,″ Pierre-Olivier Gourinchas, the IMF’s chief economist, told reporters Tuesday. ”Downside risks predominate.″
The IMF, a 190-country lending organization, is forecasting 7% global inflation
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