IMF projects downgrade to global economic growth for 2022, 2023

By Ovunc Kutlu

ANKARA (AA) - The International Monetary Fund (IMF) said on Wednesday it is projecting a further downgrade to global economic growth for both 2022 and 2023 due to macroeconomic and geopolitical hurdles.

IMF Managing Director Kristalina Georgieva said inflation is higher than expected and has broadened beyond food and energy prices, adding high inflation has prompted central banks of major economies to adopt tighter monetary policies, which is necessary but will weigh on the recovery from the coronavirus pandemic.

To fight against 40-year high inflation, the US Federal Reserve raised interest rates by a total of 150 basis points since March, while the Bank of England bumped rates five times in a row.

While the Fed is expected to make at least 75 basis points of a rate hike on July 27, the European Central Bank aims to raise 25 basis points on July 21.

Georgieva said Russia's war on Ukraine has an economic impact on commodity prices, which is slowing global economic growth.

"Continuing pandemic-related disruptions—especially in China—and renewed bottlenecks in global supply chains have hampered economic activity," she added.

The IMF in April had cut its growth forecast for the global economy to 3.6% for this year and next.