IMF: World may face escalating risk of recession in the next 12 months

IMF: World may face escalating risk of recession in the next 12 months

International Monetary Fund (IMF) has recently warned that the world is going to face a rising risk of recession in the coming 12 months.

Kristalina Georgieva, IMF head, said that commodity price has spiked owing to the Russia-Ukraine War and has intensified the cost-of-living crisis for around hundreds of millions of people, and it is only getting worse.

Inflation has also reached much higher than expected, she said in a blog post which was posted on the day when the figures demonstrated that the prices in the United States rose at a high of 40-year of 9.1% in June.

According to investors and economists, the US Federal Reserve may raise the interest fees by a significant 1% when its board is planned to meet in two weeks.

The Bank of Canada amazed markets recently by hiking its base rate by a complete percentage point, while New Zealand’s Reserve Bank and Bank of Korea increased their benchmark rate by 0.5% this week.

In addition to another anticipated move by the Fed, this puts high pressure on other central banks for following the match to bring inflation under control.

The challenges related to the supply chains, and constant lockdowns happening in China due to COVID have resulted in hindering the world's patchy pandemic recovery, said Georgieva.

The G20 finance ministers and central bankers meeting in Bali are facing a global economic outlook that has blackened significantly.

Credible sources cite that 2022 and 2023 are going to be challenging years with a rising risk of recession. Furthermore, the IMF is also planning to reduce its forecast for global growth for both 2022 and 2023 later this month, said Georgieva, having warned in April that the forecast of 3.6% is expected to be revised downwards.

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Anjali Mishra

Anjali Mishra

A postgraduate in Criminal Law, Anjali Mishra uses her analytical skills to understand and write about all things market. Anjali holds a keen interest in writing insightful articles on healthcare, business, finance, and emerging technologies for AlpenHornNews and numerous other portals. Coming from outside the economical milieu, Anjali aims to write in a way that helps readers with non-technical knowledge understand technical concepts with ease.