TheCable

The International Monetary Fund (IMF) says it will significantly reduce its forecast for global economic growth in its next update.

Ceyla Pazarbasioglu, IMF’s director for strategy, policy and review, said this at a Sunday panel in Bali, Indonesia, according to a Bloomberg report.

The IMF’s World Economic Outlook (WEO) report, is expected to be released on July 26.

In its last report, the IMF downgraded its outlook for global growth in 2022 to 3.6 percent but upgraded Nigeria’s economic growth rate.

Speaking at the panel, Pazarbasioglu said that surging food and energy prices, slowing capital flows to emerging markets, the COVID-19 pandemic, along with a slowdown in China made it “much more challenging” for policymakers to work out an effective economic strategy.

“It’s shock after shock after shock which are really hitting the global economy,” she said.

According to Bloomberg, the IMF director’s statement comes after the G20 finance ministers and central bank governors ended their meeting on Saturday without reaching a communique, underlining the difficulty in coordinating a global response to surging inflation and recessionary fears.

In a review due this month, “we will downgrade our forecast substantially,” Pazarbasioglu said.

Also speaking at the same panel, Hyun Song Shin, head of research at the Bank for International Settlements, said, “the path to a soft landing is narrowing; we think it is still a feasible path but certainly not a very easy one.”

“Where central banks take monetary policy in a rapid and decisive manner and have a front-loaded response to inflation, that is more conducive to a soft landing.”

The report added that central banks around the world are struggling to find the right response to price increases which are driven by supply issues.