Economic output in countries that represent a third of the world economy will shrink in the coming year.

The three largest economies, the USA, the European Union and China, are stagnating.

"In short, the worst is yet to come," says the world economic outlook presented by the International Monetary Fund (IMF) at the start of the annual meeting of the IMF and World Bank.

For many people, 2023 will feel like a recession.

The war in Ukraine, stagnation, China and high inflation are reopening the wounds of the pandemic crisis, which appeared to have at least partially healed in many economies at the beginning of the year.

German economy performs particularly poorly

Winand von Petersdorff-Campen

Economic correspondent in Washington.

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According to the forecast, no major industrial country performs worse than Germany.

Europe's largest economy will shrink by 0.3 percent in the coming year after below-average economic growth of 1.5 percent this year.

Italy is the only other major developed country that the IMF forecasts will enter a recession in the coming year.

The entire euro zone will grow by a meager 0.5 percent next year after 3.1 percent this year.

Europe is suffering from the dramatic increase in gas prices as a result of the war: the price has quadrupled since the previous year, Russia is only delivering 20 percent of the delivery volume of the previous year, increasing the possibility that energy could become scarce.

"The coming winter will be difficult for Europe, but probably even worse in 2023."

Global economic growth will slow from 6 percent in 2021 to 3.2 percent this year and 2.7 percent next year.

This is the slowest economic development in 20 years, apart from the financial and pandemic crises.

It comes together that the US economy contracted in the first half of this year while Europe's is slacking in the second half of 2022.

In addition, China is weakening.

The IMF sees rising inflation as the most pressing threat to future prosperity, pushing down real incomes and undermining economic stability.

While the authors of the outlook also see the risk that central banks will tighten monetary policy too much, they clearly weigh the risk that central banks will return to loose monetary policy too early.

If monetary policy is tightened too timidly, the trend in inflation will solidify, eroding the credibility of the central banks and causing inflation expectations to slide.

According to the IMF forecast, inflation will remain more stubborn than expected at 4.1 percent in 2024 after it is likely to have peaked at the end of this year.

In China, lockdowns are taking their toll

In addition to the inflation crisis and the war in Ukraine, the economic situation in China is a burdening factor.

Regular lockdowns to contain the pandemic took their toll, especially in the second quarter of 2022. The real estate sector, which is weakening rapidly and represents around a fifth of the Chinese economy, is also a cause for concern.

The country's problems are of global relevance because of its role in international supply chains and world trade.

In the FAZ interview, IMF chief economist Pierre-Olivier Gourinchas warns governments against using their spending policies to thwart the efforts of central banks to curb inflation.

He does not see the current energy crisis as a transitional phenomenon, but as the result of geopolitical reorientation.

He opposed attempts by governments to control energy prices through price caps, unspecified subsidies or export bans.

That rarely works.

Instead, particularly vulnerable population groups should be supported with direct payments.

In general, according to the IMF, governments should use their scarce resources to educate people better, digitize the economy and make it climate-friendly, and expand the international supply base.