Inflation pressures around the globe have increased this year,in part due to the war in Ukraine,increases in government spending,strong consumer demand and supply chain issues tied to COVID-related problems in countries such as China.
In its latest outlook,the fund forecasts global economic growth to slow sharply to 3.2 per cent in 2022 and 2.9 per cent in 2023,from 6.1 per cent last year. In April,the IMF was expecting growth of 3.6 per cent this year and next.
While the global economy is slowing,the IMF believes inflation is getting worse. It expects inflation to reach 6.6 per cent across advanced economies this year,a 0.9 percentage point increase over its April forecast.
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It does not believe inflation will retreat to its pre-pandemic level until 2024,suggesting ongoing price pressures and falling real wages across the globe.
IMF economic counsellor Pierre-Olivier Gourinchas said central banks should make the control of inflation their top priority,noting that at current levels it was a “clear risk” to economic stability.
But there was also a risk central banks could create a global recession next year.