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‘The worst is yet to come’: IMF says 2023 will ‘feel like a recession’

The International Monetary Fund (IMF), which forecasts a difficult 2023, has cut growth projections and predicted economic contraction in a third.

The World Economic Outlook report by the global financial institution said that “the worst is yet to happen”.

It added that “for many people, 2023 will feel like recession.”

The report shows a downward revision to the global growth rate in 2023 from the IMF’s July estimate.

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Next year, we can expect 2.7% growth. This is a decrease from the 6% growth last year and the 3.2% forecasted growth for next year.

The IMF stated that this is the “weakest growth profile” since 2001. It excludes the acute phase of pandemic or the global financial crisis.

It is indicative of “significant slowdowns” in the largest economies. The USA’s gross domestic product (GDP), contracted in the first half 2022. This was followed by the Euro’s contraction in 2022. There were also prolonged COVID-19 epidemics and lockdowns in China, along with a growing crisis in the property sector.

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The report states that the world is currently in a volatile period. Economic, geopolitical and ecological changes all have an impact on the global outlook.

Although the IMF issued a warning for the UK following the mini-budget market turmoil, the World Economic Outlook report was not completed prior to the chancellor’s announcement of the mini-budget. It does not reflect market activity that followed.

Pierre-Olivier Gourinchas, chief economist at IMF, told reporters that the government should make sure its spending and tax plans align with the Bank of England’s inflation-fighting remit.

When asked about Britain’s economy and the turmoil at its government bond market, he replied that fiscal policy should be aligned to monetary policy.

“Central banks are trying tighten monetary policies, and if fiscal authorities try to stimulate aggregate demand at the same, it’s almost like having two people in front of you… each trying to steer the car in their own direction.” It’s not going well.

The global economy’s future health depends on “successful calibration”, the course of war in Ukraine and any further supply-side disruptions related to pandemics like in China.

Continue reading:

The UN warns the Federal Reserve Bank and other central banks not to raise interest rates

Therese Coffey believes that Britons should be ‘assured’ by the UK’s finances

As more food and energy price shocks continue to cause inflation to persist, it could lead to further inflation.

The IMF forecast that around a third of the world’s economy will experience negative growth in two consecutive quarters.

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