Global economy entering ‘dangerous phase’: IMF

The global economy is entering a ‘dangerous phase’ of low economic growth and high financial risks, the International Monetary Fund (IMF) has warned in its latest assessment.

The IMF cut its outlook for global growth this week at the agency’s spring meeting in Washington. The news is from Sky News.

The agency said the current medium-term economic outlook is at the weakest level since the IMF began publishing economic growth forecasts in 1990.

IMF chief economist Pierre-Olivier Gourinchas said we are entering a dangerous phase, where economic growth has slowed to historical levels and financial risks have increased.

The recent banking instability has reminded us that turmoil is brewing and the situation is fragile, he added.

However, this economist also expressed hope about inflation. Inflation has been more stable than expected for several months, he said. However, global inflation has declined, mostly reflecting changes in energy and food prices. But excluding core inflation, variable energy and food components have yet to grow in many countries.

These developments helped the IMF cut its forecast for global economic growth by 0.1 percent this year and next to 2.8 percent and 3 percent, respectively.

The IMF said there is a one-in-four chance that global economic growth will fall below 2 percent this year, the equivalent of a global recession. This has happened only five times since 1970. This happened recently in 2020 and 2009.

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