[IMF Warning] Global Recession Imminent... "US Likely Cannot Avoid It"

[Asia Economy New York=Special Correspondent Joselgina] The International Monetary Fund (IMF) has downgraded its global economic growth forecast in just three months, warning that the world could soon face a recession crisis. In particular, the IMF lowered the U.S. forecast by a significant 1.4 percentage points, diagnosing that avoiding a recession will not be easy this year.

Pierre-Olivier Gourinchas, IMF Chief Economist, stated in a separate article following the release of the World Economic Outlook update on the 26th (local time), "The world could soon be on the edge of a global recession," adding, "It has been only two years since the last recession."

According to the IMF’s revised forecast, the global economic growth rate is expected to slow from 6.1% last year to 3.2% this year, and further to 2.9% next year. The growth rates for this year and next year were each lowered by 0.4 and 0.7 percentage points respectively compared to the April forecast, indicating a sharp slowdown in economic momentum.

Chief Economist Gourinchas pointed out that "many of the downside risks presented in April have begun to materialize," citing the slowdown in the world’s three largest economies?the U.S., China, and the Eurozone (19 countries using the euro)?as the reason for the adjustment. The impact reflects soaring inflation and consequent global tightening, China’s economic slowdown due to COVID-19 lockdowns, and ripple effects from the Ukraine crisis.

By country, the U.S. showed a notable downward revision (-1.4 percentage points). The U.S. growth forecast dropped from 3.7% in April to 2.3%. China’s forecast was also lowered by 1.1 percentage points to 3.3%, which the IMF explained is the lowest level in over 40 years. Additionally, growth forecasts for major European countries were also downgraded, with Germany’s forecast falling from 2.1% to 1.2%. South Korea’s growth forecast was lowered by 0.2 percentage points to 2.3%.

The IMF assessed that the probability of a recession starting in the Group of Seven (G7) countries is about 15%, four times higher than usual. Chief Economist Gourinchas said, "Next year, as household savings accumulated during the pandemic are depleted, several countries are likely to pass through economic troughs and experience recessions." Regarding the U.S., he noted, "The current environment suggests that the U.S. has a very low chance of avoiding a recession," pointing out that by the definition of two consecutive quarters of negative growth, a recession may have already begun.

This content was produced with the assistance of AI translation services.