Global Economy Facing Weakest Growth Outlook Since 1990s

The International Monetary Fund (IMF) has warned that the global economy is likely to suffer the slowest growth in over 30 years, thanks to lingering effects of the pandemic and worsening geopolitical tensions.

Kristalina Georgieva, IMF Managing Director, predicted that the global economy’s 2022 slowdown will continue this year and could continue for half a decade, with global GDP growth anticipated to be around 3%— substantially below the historical average of 3.8% witnessed over the past 20 years. “With rising geopolitical tensions, with inflation still running high, a robust recovery remains elusive,” she explained. “That harms the prospects of everyone, especially for the most vulnerable people and most vulnerable countries.”

The US and the Eurozone are set to experience a disproportionate drop in economic growth due to higher-than-average interest rates, while up to 90% of advanced economies are likely to experience some form of growth decline. Georgieva added that soaring inflation across wealthy economies will prompt central banks to hike rates even higher, putting more pressure on financial lenders even amid the recent upheaval at US and Switzerland banking institutions.

She also warned that heightened restrictions on capital flows and international cooperation— as well as curbs on migration, could axe global GDP by another 7% or $7 trillion, which amounts to the total annual GDP output of Japan’s and Germany’s economies combined.

Information for this briefing was found via the IMF. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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