The International Monetary Fund will significantly reduce its forecast for global economic growth in its next update, according to Ceyla Pazarbasioglu, the IMF’s director for strategy, policy and review, as reported by Bloomberg.
“It’s shock after shock after shock which are really hitting the global economy,” she said at a Sunday panel in Bali, Indonesia, stressing that soaring prices for food and energy, a downturn in capital flows to emerging markets, the Covid pandemic, along with a slowdown in China make it “much more challenging” for policymakers to work out an effective economic strategy.
In its April report, the IMF slashed its outlook for global growth this year to 3.6%, from 4.4%, citing rising inflationary risks and aggressive central bank tightening.
In a review due this month, “we will downgrade our forecast substantially,” Pazarbasioglu said.
Monetary regulators across the globe are struggling to cope with price increases driven by supply issues, developing since the early stages of the pandemic.
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“The path to a soft landing is narrowing; we think it is still a feasible path but certainly not a very easy one,” Hyun Song Shin, head of research at the Bank for International Settlements, said at the same panel, according to the news agency.
“Where central banks take monetary policy in a rapid and decisive manner and have a front-loaded response to inflation, that is more conducive to a soft landing,” the expert added.
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