IMF warns: Economic outlook will get worse

The International Monetary Fund (IMF) said that outlook for the world economy is more pessimistic than it had forecast last month. “There are too many challenges now and weakening economic indicators point to more challenges ahead,” IMF economist Tryggvi Gudmundsson wrote. The IMF said that outlook for the world economy is more pessimistic than it had forecast last month, due to the realization of downside risks from the impact of Russia’s war and persistent inflation. “The steady deterioration in purchasing manager indices tracking 20 economic regions in recent months confirms that the outlook is more pessimistic than indicated in the October World Economic Outlook (WEO). There are too many challenges now and weakening economic indicators point to more challenges ahead,” Tryggvi Gudmundsson, an economist in the IMF’s research department, wrote in a blog post on Monday. The IMF has cut its global growth forecast for next year to 2.7% from 2.9% in July and 3.8% in January, adding that it sees a 25% chance of growth falling below 2%. “Continued fiscal and monetary tightening is likely to be needed in many countries to reduce inflation and address debt vulnerabilities, and we expect further tightening in many G-20 economies in the coming months,” Gudmundsson wrote in a blog post ahead of G-20 leaders meeting in Bali, Indonesia, next week. Last month, the IMF estimated that about a third of the world economy will experience at least two consecutive quarters of contraction this year and next, with lost output at $4 trillion by 2026.