IMF "Global Economic Outlook Darkens... G20 Tightening to Continue"

[Image source=AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] The International Monetary Fund (IMF) stated that the prolonged Ukraine war and inflation have been confirmed, making the global economic outlook even gloomier.

According to Bloomberg on the 13th (local time), the IMF released a report prepared for the G20 summit held this week in Bali, Indonesia, along with a bleak outlook on its blog. The IMF explained on the blog that the Purchasing Managers' Index (PMI) of the Group of Twenty (G20) countries has continued to deteriorate over the past few months, and the situation is worse than when the World Economic Outlook report was released in October.

In the October report, the IMF projected next year's global economic growth rate at 2.7%, which is 0.2 percentage points lower than the 2.9% forecast presented in July. It also added that there is a 25% probability that growth will fall below 2%.

At that time, the IMF report anticipated that one-third of the world's countries would experience at least two consecutive quarters of economic contraction this year and next, indicating that one-third of countries would face a recession. The IMF expected this to result in a production loss of $4 trillion by 2026.

In the blog, the IMF stated that many countries will need to continue fiscal and monetary policy tightening to reduce inflation and address debt vulnerabilities, expecting more tightening measures in G20 countries over the coming months. It further predicted that such tightening would dampen economic activity and particularly affect the real estate sector, which is sensitive to interest rates.