The International Monetary Fund has stated that there will be a tough time in 2023 for economic growth. The organization has warned that there will be a slowdown in economic growth. A slowdown in global growth due to COVID-19, increasing high inflation and the war with Russia-Ukraine led to the reason behind it. All these reasons darkened the growth outlook.
IMF is now expecting its Global growth will down from 5.7% to 2.9% in 2023. If there is a continuously decreasing global economic status, it will be a recession in 2023. The whole world is still suffering due to the pandemic’s effect. It’s not easy to survive after a pandemic.
Here are the main reasons why the Global economic growth outlook is glooming nowadays.
High Inflation
Many policymakers see the rising risk of a global economic slowdown. According to them, it’s all due to high inflation, increasing interest rates and high costs. Due to high inflation, the world’s banks are tightening their policies. Global real GDP growth rate slowdown from 5.8% (2021)to2.9%(2022) and maybe decline to 2.0% in 2023. This situation can be termed a Growth Recession. It will reflect a weaker outlook on economic countries like China, the United States, the Eurozone and Japan.
Western Europe countries will face a winter recession due to high energy costs and limited supplies. The economy of the US will face rising unemployment. Overall the combination of gloomier economic growth, unemployment and conditions in the supply chain will cause inflation.
COVID-19
The Covid-19 pandemic is an economic crisis. Its repercussions are severe across the world. The pandemic sent dangerous waves through the world economy& triggered global growth. There is an increment in income inequality which created debts in the public and private sectors.
Many firms and households were not able to sustain themselves. They emerged into unsustainable debt levels. Therefore a slowdown in economic growth becomes a global issue.
Because of Covid-19, financial markets of bonds, stocks and share markets are also affected. This effect has wide-ranging and severe impacts on economic growth issues globally. Lockdowns during the pandemic have slowdown the supply-chain system at a global level. This added decline meant domestic spending and reduced demands for goods and services, especially from China’s trading partners. The economic growth outlook of China is growing but at its lower speed in four decades.
Russia-Ukraine War
According to IMF, there will be a significant slowdown in global economic growth this year because of the war between Russia and Ukraine. We were trying to recover our lives from the pressure and stress of the covid pandemic. But the invasion of Russia-Ukraine started the conflict in the global economy.
The economic damage from the war has severe and far-ranging effects around the world can see very clearly. Hike in oil prices, gases, grains and markets continue hurting the global output. The effect of this war is contributing to a slowdown in economic growth and adding to inflation.
Conclusion
High inflation, the invasion of Russia-Ukraine and Covid -19 has, directly and indirectly, affected the whole world physically and mentally. Due to all these issues like poverty and hunger, hikes in prices of gas and oils, energy trades, commodity trades, services travel and the financial system has been affected very badly.