INDIA: The International Monetary Fund (IMF) has announced that the world is “teetering” on the edge of a global recession. The remarks come at a crucial time when three of the most powerful superpowers- the US, China and Europe, are all suffering from skyrocketing inflation.
In an update of the World Economic Outlook, the IMF has said that nations worldwide have been affected in recent months due to the Russia-Ukraine crisis, inflation and a still ongoing pandemic.
The agency also said that if these threats continue, then the global economy faces a dire challenge: face one of its weakest years since 1970, when a period of stagflation gripped the globe.
“The world may soon be teetering on the edge of a global recession, only two years after the last one,” Pierre-Olivier Gourinchas, the IMF’s chief economist, wrote in a blog post. In short, the outlook is “extremely gloomy”, he said.
The Washington-based institution said that problems in China, EU and the US had offset a reduction in global output in the second quarter of the year- the first contraction since the beginning of the pandemic.
“Higher than expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine,” he said.