The International Monetary Fund has lowered its projections for global economic growth in 2023, reducing the world's economic growth by $4 trillion through 2026.
The Russian invasion of Ukraine that began in February has dramatically changed the outlook of the International Monetary Fund in February, according to Kristalina Georgieva, managing director of the International Monetary Fund, told an audience at Georgetown University on Thursday that things are more likely to get worse before it gets better.
The COVID 19 flu, rising inflation and worsening climate conditions are also affecting the world's economy, which is a cause of the food insecurity and high debt levels held by lower-income countries.
She said the risks of recession are rising, and that countries making up one-third of the world's economy will see at least two consecutive quarters of economic contraction this or next year.
Georgieva said the institution had already downgraded its growth projections three times. It expects to be ahead of 3.2% for 2022 and 2.9% for 2023.
The central banks around the world raise interest rates in hopes of taming rising inflation. The U.S. Federal Reserve has been aggressive in using interest rate hikes as an inflation-cooling tool, though central banks from Asia to England have begun to raise rates this week.
Georgieva said tightening monetary policy too much and too fast could push many economies into a prolonged recession, because tightening monetary policy could be too much and too fast. The IMF estimates that there will be a major impact of the invasion of Ukraine on their economies, and the countries that are already seeing major impacts on their economies.
The Organization for Economic Cooperation and Development said last week that the global economy is set to lose $2.8 trillion in output in 2023 because of the war.
The projections come after the OPEC alliance of oil-exporting countries decided Wednesday to reduce production in order to support sagging oil prices in a move that could deal with the struggling global economy and raise politically sensitive pump prices for U.S. drivers ahead of key national elections in November.