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IMF lowers 2023 global economic growth forecast to 2.7%

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Oct 12, 2022 - 01:25 AM

ANKARA (AA) – The International Monetary Fund (IMF) lowered its global economic growth forecast for 2023 to 2.7%, according to its World Economic Outlook update report released on Tuesday.

The recent forecast is 0.2 percentage point lower than the previous forecast of 2.9% made in July.

There is a 25% probability that the global economic growth in 2023 could fall below 2%, the IMF said in its latest report, titled Countering the Cost-of-Living Crisis.

The global economic growth estimate for this year was kept unchanged at 3.2%, while it stood at 6% in 2021.

“This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic and reflects significant slowdowns for the largest economies,” the report said.

“More than a third of the global economy will contract this year or next, while the three largest economies—the United States, the European Union, and China—will continue to stall. In short, the worst is yet to come, and for many people 2023 will feel like a recession,” it added.

While US economy’s growth expectation for 2022 was lowered to 1.6%, from 2.3%; euro area is expected to grow 0.5% in 2023, down from the previous estimate of 1.2%.

Turkish economy’s growth forecast, on the other hand, was raised to 5% for 2022, up from the previous estimate of 4% made in July.

The IMF stressed that Russia’s war on Ukraine continues to destabilize the global economy, while it has led to a severe energy crisis in Europe that is sharply increasing costs of living and hampering economic activity.

It noted that natural gas prices in Europe have increased more than four-fold since 2021 as Russia cut gas deliveries to less than 20% compared to 2021 levels, which could lead to energy shortages over the next winter and beyond.

The war has also pushed up food prices, causing serious hardship for low-income households around the world, especially in low-income countries, it added.

“Persistent and broadening inflation pressures have triggered a rapid and synchronized tightening of monetary conditions, alongside a powerful appreciation of the US dollar against most other currencies,” the report said.

The organization said it expects global inflation to peak in late 2022 at 8.8% to remain elevated longer than previously expected before declining to 6.5% in 2023, and later decreasing to 4.1% by 2024.

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