Global recession: ‘World may lose $4 trillion in economic output by 2026’, says IMF chief
Virendra Pandit
New Delhi: Amid indications of an approaching global recession, beginning in December 2022, the International Monetary Fund (IMF) has painted a gloomy picture of the world economy, and predicted the world could lose up to USD 4 trillion in economic output between now and the year 2026.
The global economic outlook is darkening and the risks of recession are quickly rising, IMF said, adding it will once again lower its growth projections, the media reported on Friday.
“We estimate that countries accounting for about one-third of the world economy will experience at least two consecutive quarters of contraction this or next year,” said IMF Managing Director Kristalina Georgieva during a speech at Georgetown University.
“And, even when growth is positive, it will feel like a recession because of shrinking real incomes and rising prices.”
The global lender expects the world could lose USD 4 trillion in economic output between now and 2026.
“This is the size of the German economy, a massive setback for the world economy,” she said.
After global growth hit a 6.1 percent annualized rate in October 2021 amid a strong recovery from the pandemic, the IMF has since regularly downgraded estimates. The global financial institution now expects growth of just 3.2 percent this year and only 2.9 percent next year.
They will lower again these rates when the IMF releases its latest World Economic Outlook report next week, Georgieva said.
She described the world as being in a period of “historic fragility”, traversing crises, including a pandemic, a months-long Russian war in Ukraine, and harsh waves of extreme weather events that have combined to drive a dramatic and devastating surge in prices in several countries.
“In less than three years, we lived through one shock after another,” the Bulgarian economist said.
Georgieva urged policymakers to stay the course on fighting inflation but cautioned that tightening monetary policy too much could push the world into a prolonged recessionary period.
She also exhorted the governments to respond with targeted and temporary fiscal policies to help prop up their most vulnerable citizens while not adding to overall inflation.
“It is more likely to get worse than to get better,” she said. “Uncertainty remains extremely high in the context of war and pandemic. There could be even more economic shocks.”
