{"id":2861,"date":"2023-04-11T16:03:20","date_gmt":"2023-04-11T21:03:20","guid":{"rendered":"https:\/\/embarrdowns.com\/imf-warns-of-significant-risk-to-global-growth-due-to-increasing-vulnerabilities-in-banks-following-interest-rate-rises\/"},"modified":"2023-04-11T16:03:21","modified_gmt":"2023-04-11T21:03:21","slug":"imf-warns-of-significant-risk-to-global-growth-due-to-increasing-vulnerabilities-in-banks-following-interest-rate-rises","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/imf-warns-of-significant-risk-to-global-growth-due-to-increasing-vulnerabilities-in-banks-following-interest-rate-rises\/","title":{"rendered":"IMF Warns of Significant Risk to Global Growth Due to Increasing Vulnerabilities in Banks Following Interest Rate Rises"},"content":{"rendered":"

The International Monetary Fund (IMF) has warned of a significant risk to global growth as a result of increasing vulnerabilities in banks following interest rate rises.[0]<\/a><\/sup> The IMF predicts that global growth will slow to 2.8% this year, down from 3.4% in 2022. The risks of a sharper easing in growth are even greater if the recent problems affecting US regional banks, such as the collapsed Silicon Valley Bank, or Switzerland\u2019s recently rescued Credit Suisse, are symptomatic of a more widespread malaise. If last month\u2019s banking problems are an early warning of a severe financial crisis, then global output growth could slow to just 1%.\u00a0[1]<\/a><\/sup><\/p>\n

The IMF report also estimated that the US economy will grow by 1.6% in 2023, down from 2.8% forecast last year, while the eurozone is projected to expand by 0.8%, and Britain is set to contract by 0.3%.[2]<\/a><\/sup> India’s growth rate forecast for the next fiscal year has been revised down by 0.2 percentage points to 5.9%, and the UK is expected to be the worst performer in the G7, with a 0.3% growth contraction in 2023.\u00a0<\/p>\n

The IMF said global headline inflation is set to fall from 8.7% in 2022 to 7% this year as oil prices fall and higher interest rates slow inflation.[3]<\/a><\/sup> However, core inflation, which excludes volatile food and energy costs, is expected to take longer to fall.[4]<\/a><\/sup> The IMF warned that policymakers may face difficult trade-offs to bring sticky inflation down while also maintaining growth and preserving financial stability.\u00a0[1]<\/a><\/sup><\/p>\n

IMF Chief Economist Pierre-Olivier Gourinchas said while the global economy\u2019s gradual recovery from both the pandemic and Russia\u2019s invasion of Ukraine remained on track, the situation was fragile, highlighted by the recent banking instability.\u00a0\u201cThe global economy\u2019s gradual recovery from both the pandemic and Russia\u2019s invasion of Ukraine remains on track,\u201d added Gourinchas.\u00a0<\/p>\n

The IMF report notes that the leading forces that affected the global economy in 2022 \u2013 the ratcheting-up of interest rates, the limited space for governments to cut taxes or raise public spending and historically high debt levels, and evidence of global fragmentation into rival blocs \u2013 had been overlaid and were interacting with financial stability concerns.\u00a0[3]<\/a><\/sup><\/p>\n

The IMF estimate assumes that the recent financial sector risks are contained, following a number of bank failures in March that caused volatility across global markets.[5]<\/a><\/sup> While forceful actions by policymakers to a series of bank collapses have reduced investor anxiety, the financial markets remain fragile and stressed, the IMF said in its semi-annual Global Financial Stability Report released Tuesday.\u00a0[6]<\/a><\/sup><\/p>\n

The IMF predicts that five years from now, global growth is expected to be around 3%, which marks the lowest medium-term growth forecast in an IMF World Economic Outlook report since 1990 and reflects an expected decline in population growth.\u00a0<\/p>\n

Despite a significant drop in growth rate projections from 6.8% in 2022 to 5.9% in 2023, India continues to be the fastest-growing economy in the world, according to the IMF’s World Economic Outlook figures.\u00a0[7]<\/a><\/sup><\/p>\n

The IMF warned that hard landings, particularly for advanced economies, have become a much larger risk, and policymakers may face difficult trade-offs to bring sticky inflation down while maintaining growth and preserving financial stability.[8]<\/a><\/sup><\/p>\n

0. <\/span>“Banks in ‘more precarious situation’ creating risks for global growth, IMF chief economist warns” CNBC, 11 Apr. 2023, https:\/\/www.cnbc.com\/2023\/04\/11\/banks-creating-downside-risks-for-global-growth-imf-chief-economist-.html<\/a><\/a><\/p>\n

1. <\/span>“UK economy forecast to shrink by 0.3% this year, says IMF” The Guardian, 11 Apr. 2023, https:\/\/www.theguardian.com\/business\/2023\/apr\/11\/uk-economy-shrink-imf-euro-area-energy-costs-inflation<\/a><\/a><\/p>\n

2. <\/span>“IMF downgrades US growth forecast from 2022 estimates amid rising interest rates and inflation” Daily Mail, 11 Apr. 2023, https:\/\/www.dailymail.co.uk\/news\/article-11961221\/IMF-downgrades-growth-forecast-2022-estimates-amid-rising-rates-inflation.html<\/a><\/a><\/p>\n

3. <\/span>“IMF retains Nigeria\u2019s 3.2% economic growth projection” Punch Newspapers, 11 Apr. 2023, https:\/\/punchng.com\/imf-retains-nigerias-3-2-economic-growth-projection\/<\/a><\/a><\/p>\n

4. <\/span>“IMF warns of heightened recession risk, slightly lowers global growth outlook” Yahoo Finance, 11 Apr. 2023, https:\/\/finance.yahoo.com\/news\/imf-warns-of-heightened-recession-risk-slightly-lowers-global-growth-outlook-130037765.html<\/a><\/a><\/p>\n

5. <\/span>“IMF cuts GDP forecasts, says global economy heading for weakest growth since 1990” CNBC, 11 Apr. 2023, https:\/\/www.cnbc.com\/2023\/04\/11\/imf-world-economic-outlook-april-2023-weak-growth-forecasts-inflation-high-until-2025.html<\/a><\/a><\/p>\n

6. <\/span>“IMF Warns It’s Too Soon to Sound All-Clear on Financial Turmoil” Bloomberg, 11 Apr. 2023, https:\/\/www.bloomberg.com\/news\/articles\/2023-04-11\/imf-warns-it-s-too-soon-to-sound-all-clear-on-financial-turmoil<\/a><\/a><\/p>\n

7. <\/span>“IMF lowers India\u2019s growth projection to 5.9 pc for current fiscal” The Indian Express, 11 Apr. 2023, https:\/\/indianexpress.com\/article\/business\/imf-lowers-indias-growth-projection-to-5-9-pc-for-current-fiscal-8551076\/<\/a><\/a><\/p>\n

8. <\/span>“Only Italy will grow slower than the UK, according to grim IMF forecast” Evening Standard, 11 Apr. 2023, https:\/\/www.standard.co.uk\/news\/politics\/imf-forecast-uk-rishi-sunak-italy-growth-b1073406.html<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The International Monetary Fund (IMF) has warned of a significant risk to global growth as a result of increasing vulnerabilities in banks following interest rate rises.[0]<\/a><\/sup> The IMF predicts that global growth will slow to 2.8% this year, down from 3.4% in 2022. The risks of a sharper easing in growth are even greater if the recent problems affecting US regional banks, such as the collapsed Silicon Valley Bank, or Switzerland\u2019s recently rescued Credit Suisse, are symptomatic of a more widespread malaise. If last month\u2019s banking problems are an early warning of a severe financial crisis, then global output growth could slow to just 1%.\u00a0[1]<\/a><\/sup><\/p>\n

The IMF report also estimated that the US economy will grow by 1.6% in 2023, down from 2.8% forecast last year, while the eurozone is projected to expand by 0.8%, and Britain is set to contract by 0.3%.[2]<\/a><\/sup> India’s growth rate forecast for the next fiscal year has been revised down by 0.2 percentage points to 5.9%, and the UK is expected to be the worst performer in the G7, with a 0.3% growth contraction in 2023.\u00a0<\/p>\n

The IMF said global headline inflation is set to fall from 8.7% in 2022 to 7% this year as oil prices fall and higher interest rates slow inflation.[3]<\/a><\/sup> However, core inflation, which excludes volatile food and energy costs, is expected to take longer to fall.[4]<\/a><\/sup> The IMF warned that policymakers may face difficult trade-offs to bring sticky inflation down while also maintaining growth and preserving financial stability.\u00a0[1]<\/a><\/sup><\/p>\n

IMF Chief Economist Pierre-Olivier Gourinchas said while the global economy\u2019s gradual recovery from both the pandemic and Russia\u2019s invasion of Ukraine remained on track, the situation was fragile, highlighted by the recent banking instability.\u00a0\u201cThe global economy\u2019s gradual recovery from both the pandemic and Russia\u2019s invasion of Ukraine remains on track,\u201d added Gourinchas.\u00a0<\/p>\n

The IMF report notes that the leading forces that affected the global economy in 2022 \u2013 the ratcheting-up of interest rates, the limited space for governments to cut taxes or raise public spending and historically high debt levels, and evidence of global fragmentation into rival blocs \u2013 had been overlaid and were interacting with financial stability concerns.\u00a0[3]<\/a><\/sup><\/p>\n

The IMF estimate assumes that the recent financial sector risks are contained, following a number of bank failures in March that caused volatility across global markets.[5]<\/a><\/sup> While forceful actions by policymakers to a series of bank collapses have reduced investor anxiety, the financial markets remain fragile and stressed, the IMF said in its semi-annual Global Financial Stability Report released Tuesday.\u00a0[6]<\/a><\/sup><\/p>\n

The IMF predicts that five years from now, global growth is expected to be around 3%, which marks the lowest medium-term growth forecast in an IMF World Economic Outlook report since 1990 and reflects an expected decline in population growth.\u00a0<\/p>\n

Despite a significant drop in growth rate projections from 6.8% in 2022 to 5.9% in 2023, India continues to be the fastest-growing economy in the world, according to the IMF’s World Economic Outlook figures.\u00a0[7]<\/a><\/sup><\/p>\n

The IMF warned that hard landings, particularly for advanced economies, have become a much larger risk, and policymakers may face difficult trade-offs to bring sticky inflation down while maintaining growth and preserving financial stability.[8]<\/a><\/sup><\/p>\n

0. <\/span>“Banks in ‘more precarious situation’ creating risks for global growth, IMF chief economist warns” CNBC, 11 Apr. 2023, https:\/\/www.cnbc.com\/2023\/04\/11\/banks-creating-downside-risks-for-global-growth-imf-chief-economist-.html<\/a><\/a><\/p>\n

1. <\/span>“UK economy forecast to shrink by 0.3% this year, says IMF” The Guardian, 11 Apr. 2023, https:\/\/www.theguardian.com\/business\/2023\/apr\/11\/uk-economy-shrink-imf-euro-area-energy-costs-inflation<\/a><\/a><\/p>\n

2. <\/span>“IMF downgrades US growth forecast from 2022 estimates amid rising interest rates and inflation” Daily Mail, 11 Apr. 2023, https:\/\/www.dailymail.co.uk\/news\/article-11961221\/IMF-downgrades-growth-forecast-2022-estimates-amid-rising-rates-inflation.html<\/a><\/a><\/p>\n

3. <\/span>“IMF retains Nigeria\u2019s 3.2% economic growth projection” Punch Newspapers, 11 Apr. 2023, https:\/\/punchng.com\/imf-retains-nigerias-3-2-economic-growth-projection\/<\/a><\/a><\/p>\n

4. <\/span>“IMF warns of heightened recession risk, slightly lowers global growth outlook” Yahoo Finance, 11 Apr. 2023, https:\/\/finance.yahoo.com\/news\/imf-warns-of-heightened-recession-risk-slightly-lowers-global-growth-outlook-130037765.html<\/a><\/a><\/p>\n

5. <\/span>“IMF cuts GDP forecasts, says global economy heading for weakest growth since 1990” CNBC, 11 Apr. 2023, https:\/\/www.cnbc.com\/2023\/04\/11\/imf-world-economic-outlook-april-2023-weak-growth-forecasts-inflation-high-until-2025.html<\/a><\/a><\/p>\n

6. <\/span>“IMF Warns It’s Too Soon to Sound All-Clear on Financial Turmoil” Bloomberg, 11 Apr. 2023, https:\/\/www.bloomberg.com\/news\/articles\/2023-04-11\/imf-warns-it-s-too-soon-to-sound-all-clear-on-financial-turmoil<\/a><\/a><\/p>\n

7. <\/span>“IMF lowers India\u2019s growth projection to 5.9 pc for current fiscal” The Indian Express, 11 Apr. 2023, https:\/\/indianexpress.com\/article\/business\/imf-lowers-indias-growth-projection-to-5-9-pc-for-current-fiscal-8551076\/<\/a><\/a><\/p>\n

8. <\/span>“Only Italy will grow slower than the UK, according to grim IMF forecast” Evening Standard, 11 Apr. 2023, https:\/\/www.standard.co.uk\/news\/politics\/imf-forecast-uk-rishi-sunak-italy-growth-b1073406.html<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":2860,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2861"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=2861"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2861\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/2860"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=2861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=2861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=2861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}