The International Monetary Fund predicts global growth will slow to 2.7% next year, 0.2 percentage point lower than its July forecast, and anticipates 2023 will feel like a recession for millions around the world.
Aside from the global financial crisis and the peak of the Covid-19 pandemic, this is “the weakest growth profile since 2001,” the IMF said in its World Economic Outlook published Tuesday. Its GDP estimate for this year remained steady at 3.2%, which was down from the 6% seen in 2021.
“The worst is yet to come, and for many people 2023 will feel like a recession,” the report said, echoing warnings from the United Nations, the World Bank and many global CEOs.
More than a third of the global economy will see two consecutive quarters of negative growth, while the three largest economies — the United States, the European Union and China — will continue to slow, the report said.
“Next year is going to feel painful,” Pierre-Olivier Gourinchas, the IMF’s chief economist, told CNBC on Tuesday on the back of the report. “There’s going to be a lot of slowdown and economic pain,” he said.
In its report, the IMF laid out three major events currently hindering growth: Russia’s invasion of Ukraine, the cost-of-living crisis and China’s economic slowdown. Together, they create a “volatile” period economically, geopolitically and ecologically.
The war in Ukraine continues to “powerfully destabilize the global economy,” according to the report, with its impacts causing a “severe” energy crisis in Europe, along with destruction in Ukraine itself.
The price of natural gas has more than quadrupled since 2021, as Russia now delivers less than 20% of 2021 levels. Food prices have also been pushed up as a result of the conflict.
The IMF anticipates that global inflation will peak in late 2022, increasing from 4.7% in 2021 to 8.8%, and that it will “remain elevated for longer than previously expected.”
Global inflation will likely decrease to 6.5% in 2023 and to 4.1% by 2024, according to the IMF forecast. The agency noted the tightening of monetary policy across the world to combat inflation and the “powerful appreciation” of the U.S. dollar against other currencies.