Global economy on the brink of recession, IIF says

The global economy is "teetering on the brink of recession" as the war in Ukraine, Covid-19 lockdowns in China and a hawkish US Federal Reserve weigh on activity worldwide, the Institute of International Finance said in a report.

In its latest forecast, the IIF estimates global gross domestic product to grow 2.2 per cent this year, with activities slowing to 0.5 per cent in the fourth quarter. The Euro area as well as emerging markets, excluding China, are anticipated to go into a recession by the end of the year.

"Since the statistical carryover from 2021 is 2.3 per cent, this is a de facto flatlining of global GDP," the report said.

The IIF's estimates are below the latest prediction from the International Monetary Fund, which has also lowered its growth forecast this year, due to the Ukraine war and inflation stoked by soaring commodity prices.

The IMF projects global growth at 3.6 per cent this year and next, down 0.8 and 0.2 percentage points from its January forecast, respectively.

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