IMF says a third of the global economy will shrink in coming months, as it cuts SA forecast

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Global growth is expected to slow further next year, the IMF said on Tuesday, downgrading its forecasts as countries grapple with the fallout from Russia’s invasion of Ukraine, spiraling cost-of-living and economic downturns.

The world economy has been dealt multiple blows, with war in Ukraine driving up food and energy prices following the coronavirus outbreak while soaring costs and rising interest rates threaten to reverberate around the globe.

“This year’s shocks will re-open economic wounds that were only partially healed post-pandemic,” said International Monetary Fund economic counsellor Pierre-Olivier Gourinchas, in a blog post accompanying the fund’s latest World Economic Outlook.

More than a third of the global economy is headed for contraction this year or next, and the three biggest economies — the United States, European Union and China — will continue to stall, he warned.

“The worst is yet to come and, for many people, 2023 will feel like a recession,” said Gourinchas.

The IMF lowered its growth forecast for South Africa. It now expects the economy to grow by only 2.1% this year – in July it was still expecting growth of 2.3%. For next year, it now sees growth of 1.1% – from 1.4% previously. In contrast, it expects Sub-Saharan Africa to grow by 3.7% next year.

In its report, the IMF trimmed its 2023 global GDP forecast to 2.7%, 0.2 points down from July expectations. — AFP