The International Monetary Fund (IMF) has lowered its outlook for global growth out of concern that a severe decline, which could include a recession, may occur due to worries that rising interest rates could force banks to reduce lending and concerns about the global banking system. The warning came after weeks of turmoil in the global banking sector, including the Swiss government’s mediation of UBS’s acquisition of Credit Suisse. The fear that bank runs would reverberate throughout the financial system has subsided, but there are still concerns that additional bank failures and tightening lending standards could impede global economic output. The IMF decreased its growth forecast for 2023 from 2.9% in January to 2.8%.
In recent weeks, both the IMF and the World Bank have sounded the alarm that the global economy faces a protracted period of stagnation, and the IMF expects growth to meander around 3% over the next five years, which is its weakest medium-term growth forecast since 1990. The IMF’s chief economist, Pierre-Olivier Gourinchas, stated that prospects for a stronger economy depended in part on China’s reopening following strict Covid-19 regulations. The spring meetings of the IMF and the World Bank are taking place in Washington, where senior economic officials from around the globe will convene. The meeting is taking place at a time of great unpredictability, as Russia’s conflict in Ukraine drags on, prices around the globe remain stubbornly high, and debt burdens in developing countries raise concerns regarding the possibility of defaults.
The inflation rate is still high, and the global economy is still fragile, with an uncertain road ahead. According to the IMF, a so-called hard landing, which could result in a global recession, is becoming increasingly probable. The risk of a harsh landing has increased, especially for advanced economies. Although Treasury Secretary Janet L. Yellen expressed confidence in the U.S. banking system and the health of the economy, stating that she continues to believe that the outlook is brighter than what many economists predicted last fall, she acknowledged that the risks facing the economy remain a concern, including recent pressures on banking systems in the U.S. and Europe and the possibility of additional fallout from Russia’s war in Ukraine.
Yustika Kusuma Putri, she is social media marketer from Indonesia. I currently work as a Media Manager in Technologie Omicrom Sendas inc.
I'm passionate about staying up-to-date with the latest news and trends. I believe that being informed about what's happening in the world is essential to making informed decisions, both in business and in life.
That's why I'm excited to share my insights and provide you with updated information on these topics.