Global economy faces steep challenges, says the IMF
The global economy faces steep challenges as the world’s three-largest economies stall amid a cost-of-living crisis and the worst is yet to come, the IMF’s chief economist told a press conference on the latest World Economic Outlook.
Pierre-Olivier Gourinchas said inflation pressures were proving more persistent than anticipated and rapidly rising prices are causing serious hardship for households almost everywhere, particularly the poor.
The IMF left its global growth forecast for 2023 unchanged at 3.2 percent, but lowered next year’s projection by 0.2 percentage points from July’s outlook to 2.7 percent.
“For many people 2023 will feel like a recession,” Gourinchas said.
Policy tradeoffs have become acutely challenging as inflation extends beyond food and energy, with risks that over-tightening could tip the global economy into an unnecessarily severe recession while under-tightening could further entrench inflation, he added.
“The hard-won credibility of central banks could be undermined if they misjudge yet again the stubborn persistence of inflation.”
