IMF: Global recession is possible next year given current huge risks

The Director of the International Monetary Fund (IMF), Kristalina Georgieva, said that the outlook for the global economy has “worsened a lot” since last April, noting that she cannot rule out the possibility of a global recession next year in light of the current huge risks.

Georgieva added that the fund will reduce in the coming weeks its forecast for a 3.6% growth in the global economy for the third time this year, pointing out that the fund’s economists are still preparing the final new ratios, Reuters reported.

The IMF is expected to publish its updated forecasts for 2022 and 2023 in late July, after trimming its forecast by nearly 1% in April, according to the AlArabiya website.

The global economy achieved a growth rate of 6.1% in 2021.

“The outlook since our last update in April has become significantly bleak,” Georgieva added, citing a larger spread of global inflation, more significant interest rate increases, slowing economic growth in China, and escalating sanctions related to the Russian war in Ukraine.

Georgieva continued: “We are in the midst of choppy waves.”

In response to a question about whether she can rule out a global recession, Georgieva stressed that “the risks are increasing, so we cannot rule it out.”

She said that recent economic data showed that some large economies, including those of China and Russia, contracted in the second quarter, noting that risks may be higher in 2023.

She noted, “The year 2022 will be difficult, but 2023 may be more difficult, and the risks of recession increase in 2023.”

She assured 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.