Risks Abound, According to IMF, As the Prognosis for the World Economy Darkens

The IMF stated that new high-frequency indicators “suggest that the prognosis is gloomier,” notably in Europe, in a blog post for a G20 conference being held in Indonesia.

It claimed that most of the Group of 20’s major economies were showing signs of deterioration in recent purchasing manager indices, which measure manufacturing and services activity. It was predicted that the economies would fall as inflation remained stubbornly high.

The IMF said that global fragmentation added to “a convergence of downside risks” and that “readings for an increasing share of G20 nations have slipped from levels that suggest contraction earlier this year.”

The IMF added that the current political environment was “unusually unstable” and that the challenges facing the world economy were “immense and weakening economic indicators hint to greater challenges ahead.”

While a protracted period of high inflation would result in larger-than-expected policy interest rate increases and further tightening of global financial conditions, a growing energy crisis in Europe would have a significant negative impact on economy and raise prices.

The IMF then stated that this presented “growing risks of a sovereign debt crisis for vulnerable economies.”

Global growth would be harmed by increasingly extreme weather events, it claimed.

Written by Aly Bukshi

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