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It
blamed the darker outlook on tightening monetary policy
triggered by persistently high and broad-based inflation, weak
growth momentum in China, and ongoing supply disruptions and
food insecurity caused by Russia’s invasion of Ukraine.
The global lender last month cut its global growth forecast for
2023 to 2.7% from a previous forecast of 2.9%.
In a blog prepared for a summit of G20 leaders in Indonesia, the
IMF said recent high-frequency indicators "confirm that the
outlook is gloomier," particularly in Europe.
It said recent purchasing manager indices that gauge
manufacturing and services activity signaled weakness in most
Group of 20 major economies, with economic activity set to
contract while inflation remained stubbornly high.
"Readings for a growing share of G20 countries have fallen from
expansionary territory earlier this year to levels that signal
contraction," the IMF said, adding that global fragmentation
added to "a confluence of downside risks."
"The challenges that the global economy is facing are immense
and weakening economic indicators point to further challenges
ahead," the IMF said, adding that the current policy environment
was "unusually uncertain."
A worsening energy crisis in Europe would severely harm growth
and raise inflation, while prolonged high inflation could prompt
larger-than-anticipated policy interest hikes and further
tightening of global financial conditions.
That in turn posed "increasing risks of a sovereign debt crisis
for vulnerable economies," the IMF said.
Increasingly severe weather events would also harm growth across
the globe, it said.
(Reporting by Andrea Shalal)
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