28.07.22 Review

Gloomy and Gloomier: IMF has lowered its Global Economic Forecast and predicts stagnation for European economies and the US if Russian gas supplies are cut off

"Gloomy and More Uncertain" is the title for the July update of IMF’s World Economic Outlook for 2022–2023 — it is the second time this year that IMF has revised its forecast for the worse.

The reasons are rising inflation in the United States, the slowdown of the Chinese economy and the negative impact that the war in Ukraine and tighter monetary policy have had on the European economy.

Separately the IMF has considered a negative scenario, that might be partially caused by a reduction in oil exports from Russia to Europe — and a halt to gas exports. In that case economic growth in the US and Eurozone might come close to zero in 2023. At the same time, due to Russia's high export earnings and the sustainability of its domestic demand, the IMF forecasts a smoother contraction of the Russian economy compared to the April estimates.