G20 Summit

In the last month, the global lender reduced its global growth forecast for 2023 from 2.9 per cent to 2.7 per cent. The recent purchasing manager indices measuring manufacturing and services activities indicated a weakness in most Group of 20 major economies, said the International Monetary Fund

The International Monetary Fund (IMF) said that the global economic outlook is even gloomier than what was projected in the last month, on 13 November 2022. Also, it cited that a steady downfall in purchasing manager surveys has been witnessed in recent months.

Led by a persistently high and broad-based inflation, the fund blamed the darker outlook on strengthening monetary policy, weak growth momentum in China and ongoing supply disruptions and food insecurity which is caused by Russia-Ukraine crisis.

In the last month, the global lender reduced its global growth forecast for 2023 from 2.9 per cent to 2.7 per cent. The IMF in a blog for the purpose of summit of G20 leaders in Indonesia, said that recent high-frequency indicators has confirmed on the outlook being gloomier, specifically in Europe.

The recent purchasing manager indices measuring manufacturing and services activities indicated a weakness in most Group of 20 major economies, said the IMF. Also, the economic activity contracted whereas inflation remained high, it added.

“Readings for a growing share of G20 countries have fallen from expansionary territory earlier this year to levels that signal contraction,” the IMF said

Indicating the current policy environment to be “unusually uncertain, it said, “The challenges that the global economy is facing are immense and weakening economic indicators point to further challenges ahead. However, with careful policy action and joint multilateral efforts, the world can move toward stronger and more inclusive growth.

The constant energy crisis in Europe would crucially harm growth and increase the inflation. Whereas prolonged high inflation could lead to hike in policy interest, it being larger-than-anticipated and further tightening of global financial conditions.

That in turn is “increasing risks of a sovereign debt crisis for vulnerable economies,” the IMF said. Also, growth across the globe would also be impacted due to increasing severe weather events, it said.