IMF refers to the international Monterey fund; it is the institution of the united nation that set standards for the global economy intending to strengthen its participatory countries economically. Currently, 189 nations are a member of this organization and the members represent to IMF executive board. A perfect storm of doom has seen pummeled the global economy in recent months, the global growth is undermining. However, the IMF warned on Tuesday that the worst-case scenario is plausible, which would cut the growth at global and see one of the lowest levels of growth in the past five decades. According to the IMF, the reason behind the sharp decrease in growth of the global economy is the Ukraine war, raising the energy and food prices, supply chain disruption, and many others also. These are the reason that the world is suffering from inflation. Central banks are also raising interest rates. The international Monterey fund executives mentioned there are seven reasons behind the global growth outlook of doom that is.
- Sudden stop in Europe’s gas import
- More persistent inflation
- Escalation of the chains property crisis
- Renewed covid flare-ups
- The Ukraine war
- Supply chain disruption
- Increased in food prices and energy
These are the seven reasons behind the shaping slowdown in global economic growth. If these seven risk outlooks occur then the global growth will fall by 2 percent in 2023. Let us discuss how these risks affect global growth.
The gas problem in Europe
In the escalation of the Russian invasion of Ukraine, according to several reports that since April, the Russian gas pipeline to Europe has been stopped to about 40 percent of the previous year's level. The European government imposed sanctions against Russia because of its war. The pain is not expected to relax anytime soon, and the IMF forecast volume can be declined further. The worst case scenario is a total cession of export gas in 2022 that could be increase inflation world wide and that effect Europe badly with down fall in global economy growth. This will hit the cross border trade also. this make circle back to Ukraine war.
More persistence inflations
The inflations are continuously increasing in 2022 all around the world. Inflation is seen in food prices and energy prices at the global level. This inflation is spurring and prompting the government to raise borrowing costs to tamp down the demand. In the worst-case scenario, central banks take action and participate in recession even as costs rise, which will create a scenario that is known as stagflation. The case of inflation creates uncertainty in employment. If the policymakers fail to make an appropriate decision then they can face further complications. However, it is expecting the economy to return to near the pandemic level by the end of 2024.
Higher food and energy prices
An increase in food and energy prices highly impacts daily life. These raises in price threaten not just family budgets but also social life. The reason behind food inflation is Russia’s blockade of Ukrainian grain export. The supply chain disruption is also impact the prices of food and energy also. There are several uncertainties faced at the global level and beyond the global economy, this conflict has created global political fragmentation and geopolitical blocs also. It will impact the smooth working of the global economy and politics also.
The Ukraine war
The Ukraine war is the main reason that hit economy at global level. The Ukraine war is not only an impact on the economy but geopolitics also. This conflict creates a lot of nations means the difference in technology standers and cross-border payment systems, currencies, trade of economies, and many more. It will also impact the multilateral cooperation among nations. Thus less interaction on global level issues like climate change, worsening the food crisis, and many other conservable issues.
Renewing the COVID cases
It provides relief when we see an ongoing covid outbreak, including the financial support and reworking of Beijing's zero cases covid strategy. This offers some sign of hope in the world's second-largest economy. But the possibility of a large-scale outbreak due to contagious variants means widespread outbreak can be reason lockdown still a real threat to the world. It will impact not only the economy but also the finances. Meanwhile, China is facing trouble in the property sector also. All these things impact globally. It is not expecting all situations under control soon.
Supply chain disruption
Supply chain disruption is one of the common reasons for facing a shortage of material at the global level. During COVID globally faces disruption in the supply chain and still it is in a fragile situation. Every nation is not a master in every sector because of its physical structure and environment also. So nations are depending on each for goods and services. Thus supply chains play giant role economic growth of the nation. According to IMF the COVID situation is not under control yet so it can become worst. This will impact the growth of the global economy.
this guide mentioned all information that impacts the global economy according to IMF. According to IMF, several problems nations are facing still because of mentioned reasons. So it guides how it impacts the economy. Providing prospects about the worst-case scenario of the economy, when situations are not controlled by the policymakers.