The International Monetary Fund (IMF) cut its global growth outlook by the largest amount since the start of the pandemic, predicting increased inflation thanks to Russia’s invasion of Ukraine and the current Chinese covid-related lockdowns, reports Caixin.
Global expansion will slow to 3.6% in 2022, down from a forecast of 4.4% in January before the war, the IMF said in an update to its World Economic Outlook released Tuesday. That compares with 6.1% growth in 2021. The institution also lowered its growth projection for 2023 to 3.6% from a previous 3.8%.
The fund sees inflation for this year at 5.7% in advanced economies and 8.7% in emerging and developing countries, significantly higher than just a few months ago. The pace of consumer-price increases is expected to slow to 2.5% in advanced economies and 6.5% in developing countries in 2023. The IMF cited a rising risk that inflation expectations become unanchored, prompting more-aggressive central bank tightening.