Facing a Darkening Economic Outlook: How the G20 Can Respond
As G20 ministers and central bank governors gather in Bali this week, they face a global economic outlook that has darkened significantly.
When the G20 last met in April, the IMF had just cut its global growth forecast to 3.6 percent for this year and next—and we warned this could get worse given potential downside risks. Since then, several of those risks have materialized—and the multiple crises facing the world have intensified.
The human tragedy of the war in Ukraine has worsened. So, too, has its economic impact especially through commodity price shocks that are slowing growth and exacerbating a cost-of-living crisis that affects hundreds of millions of people—and especially poor people who cannot afford to feed their families. And it’s only getting worse.
Inflation is higher than expected and has broadened beyond food and energy prices. This has prompted major central banks to announce further monetary tightening—which is necessary but will weigh on the recovery. Continuing pandemic-related disruptions—especially in China—and renewed bottlenecks in global supply chains have hampered economic activity.
As a result, recent indicators imply a weak second quarter—and we will be projecting a further downgrade to global growth for both 2022 and 2023 in our World Economic Outlook Update later this month.
Indeed, the outlook remains extremely uncertain. Think of how further disruption in the natural gas supply to Europe could plunge many economies into recession and trigger a global energy crisis. This is just one of the factors that could worsen an already difficult situation.
It is going to be a tough 2022—and possibly an even tougher 2023, with increased risk of recession.
That is why we need decisive action and strong international cooperation, led by the G20. Our new report to the G20 outlines policies that countries can use to navigate this sea of troubles. Let me highlight three priorities.
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Πηγή: blogs.imf.org
