International Monetary Fund Managing Director Kristalina Georgieva said on Wednesday that the outlook for the global economy "has worsened significantly" since last April, and that she could not rule out the possibility of a global recession next year given the huge risks that exist.
Georgieva told Reuters that in the coming weeks, the fund will reduce its forecast for 3.6% growth in the global economy for the third time this year, and that the fund's economists are still preparing the final new ratios.
The International Monetary Fund is expected to publish its updated forecasts for 2022 and 2023 in late July, after it reduced its forecast by nearly 1% last April, and the global economy had achieved a growth rate of 6.1% in 2021.
“The outlook since our last update in April has become significantly bleak,” Georgieva said in an interview with Reuters, citing a larger spread of global inflation, further large interest rate increases, slowing economic growth in China and escalating sanctions related to the Russian war. In Ukraine, she added, "We are in choppy waves."
higher risks
Asked if she could rule out a global recession, Georgieva said, "The risks are increasing, so we can't rule it out."
She added that recent economic data showed that some large economies - including those of China and Russia - contracted in the second quarter, indicating that risks may be higher in 2023.
And she continued, "The year 2022 will be difficult, but the year 2023 may be more difficult. The risks of recession increased in 2023."
Federal Reserve Chairman Jerome Powell announced last June that the US central bank is not trying to engineer a recession, but is fully committed to controlling prices even if that leads to the risk of economic deflation.
Georgieva said that tightening fiscal policies for a longer period would further complicate the outlook for the global economy, but added that it was necessary to control price increases.