IMF chief says ‘cannot rule out’ possible global recession

The head of the International Monetary Fund (IMF) said on Wednesday that the outlook for the global economy has “dimmed significantly” since April and that

she cannot rule out a possible global recession next year due to heightened risks.

IMF Managing Director Kristalina Georgieva told Reuters the Fund will cut its 3.6% forecast for global economic growth in 2022 for the third time this year in the coming weeks, adding that IMF economists are still finalizing the new numbers.

The IMF is due to release its updated estimate for 2022 and 2023 at the end of July, after having lowered its forecast by nearly 1 percentage point in April. The global economy grew by 6.1% in 2021.

“We are in very rough waters,” she commented. When asked about a global recession, Georgieva said that “the risk has increased so we cannot rule it out”.

Georgieva stated that “it’s going to be a tough ’22, but maybe an even tougher 2023”, adding that “recession risks have increased for 2023”.

She said a longer-lasting tightening of financial conditions would complicate the global economic outlook, but added that controlling rising prices was crucial.

The global outlook is more mixed now than it was just two years ago, with energy exporting countries, including the United States, doing better while importers are struggling, Georgieva said.