The International Monetary Fund's No. says current growth forecasts provide a buffer against a potential global recession. 2 official said Monday.
The conflict in Ukraine could escalate, according to the IMF First Deputy Managing Director Gita Gopinath, and there was a tightening of interest rates and a slowdown in Chinese growth, among other threats to economic growth, according to an interview on the sidelines of the World Economic Forum in the Swiss resort of Davos.
Gopinath said all of these are downside risks, with reference to the IMF's 2022 growth forecast of 3.6%, a downgrade from a 4.4% estimate in January.
She said that there is a buffer around the world and that risks are uneven around the world, and that is why I would say that at 3.6% there is a buffer.
There are countries that are getting hit hard in Europe that are getting hit hard by the war, where we could see technical recessions, Gopinath said.
Gopinath said that inflation will remain well above central bank targets for a while, adding that it is very important for central bankers to deal with inflation as a clear and present danger and that is something they need to deal with in a forceful manner. Financial conditions could tighten much more quickly than we have seen. She said that growth in China is slowing down.
The US Federal ReserveFederal Reserve has led the charge among the largest central banks, with two rate hikes this year.
Its second place was the largest in 22 years, at half a percentage point. At least two more of that size are expected to be seen at coming meetings.
Gopinath said that it is important for the Fed to watch the data carefully and respond at a scale that's needed to deal with the incoming data.
If inflation is going up even more, they may need to react more strongly.