The International Monetary Fund (IMF) has warned that the worst is yet to come for the global economy as efforts to manage sky-high inflation risk compound damage from the war in Ukraine and a slowdown in China.
The Washington-based organisation has cut its forecast for global growth next year to 2.7% – down from 2.9% as predicted in July and 3.8% in January. It now sees a 25% possibility that growth will slow to less than 2%.
In its World Economic Outlook published today, the IMF also criticised UK chancellor Kwasi Kwarteng’s recent mini-budget saying his tax cuts and energy support package had made the Bank of England’s battle against inflation more difficult.
The IMF said the UK was on course for a sizeable slowdown in growth from 3.6% this year to 0.3% (lowered from 0.5% previously) in 2023 but said these forecasts had been made before Kwarteng delivered his mini-budget on September 23.
“The fiscal package is expected to lift growth somewhat above the forecast in the near term, while complicating the fight against inflation,” the IMF said.