Global economic forecasts dropping…

**Global Economic Forecasts Are Dropping Fast**

**The International Monetary Fund’s new World Economic Outlook expects growth to slow to 3.6 percent this year. The group is one of many to slash their forecasts recently.**
**By Ana Swanson and Alan Rappeport, The New York Times, April 19, 2022**

**In the last week, international organizations and think tanks have begun slashing their forecasts for growth and trade as they assess the Ukraine war’s disruptions to global energy, food and commodity supplies, as well as China’s sweeping lockdowns to contain a renewed coronavirus outbreak....**

**The International Monetary Fund said in its World Economic Outlook that global output was expected to slow this year to 3.6 percent, from 6.1 percent in 2021. That is a downgrade from a January forecast of 4.4 percent growth this year....The I.M.F. expects the Ukrainian economy to contract by 35 percent this year, while Russia’s economy is projected to shrink by 8.5 percent. ...**

**At the Peterson Institute for International Economics, a Washington think tank, economists expect global growth to decline from a rapid 5.8 percent in 2021 to 3.3 percent annually in 2022 and 2023...**

**The World Bank lowered its 2022 growth forecast to 3.2 percent from 4.1 percent...**

**According to the Bank of International Settlements, more than half of emerging economies have inflation rates above 7 percent. And 60 percent of “advanced economies,” including the United States, Britain and the euro area, have inflation over 5 percent, the largest share since the 1980s, the bank said...** [end quote]

The convergence of the IMF, World Bank and Peterson Institute on a 2022 global growth forecast of about 3.3% is remarkable. I assume that their independent economists work separately.

The high global inflation rate will force central banks to tighten monetary policy. This is intended to reduce demand and will be especially hard on developing countries, which are suffering high inflation in energy, food and fertilizer costs. The combination of a rising USD and rising interest rates will hurt many developing countries.

And raising interest rates could cause a recession.

After a pretty terrible 2020 and 2021, we were all hoping that 2022 would be a nice, prosperous, relaxed year. It may not turn out that way.



The high global inflation rate will force central banks to tighten monetary policy.


That is obvious from here. But Xi in China might not go along with that. There are common handful of reasons that dictators print money. Xi has fallen into printing and creating inflation. Between the massive Chinese lockdowns and the need for GDP growth etc…Xi may not want the pain of a recession.

But discussing Xi has making a choice is not accurate. The dictators as they walk into using the printing press are not making any sorts of decision. There is no intellect there. It is bare knuckle stupidity controlling a country. No amount of verbiage dressing it up will change that.

It is a gift for the west.

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