The key events:
The IMF chief warned that the outlook for the global economy has “darkened considerably” in recent months.
Kristalina Georgiava said the commodity price shock caused by the war in Ukraine had exacerbated the cost of living crisis for hundreds of millions of people and that the risk of recession was increasing.
“The outlook remains extremely uncertain. Think of how another disruption in Europe’s natural gas supply could push many economies into recession and trigger a global energy crisis.
This is just one of the factors that could make an already difficult situation worse.
“2022 will be a tough year – and possibly an even tougher 2023, with an increased risk of recession.”
The IMF would revise down its global growth forecasts for 2022 and 2023 later this month, she said, after warning in April that its forecast of 3.6% was likely to be revised down. decrease.
Here is the full story:
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Europe’s economic outlook is deteriorating as the Russian-Ukrainian war continues to drive up oil and gas prices, hampers supply chains and threatens large-scale energy supply disruptions.
This is expected to be the message of European Commissionwhen releasing its latest economic projections this morning.
This summer forecast is due at 10am UK time, but Bloomberg has already seen a preview version. This shows that the euro zone’s rebound from the pandemic will be weaker than expected and inflation will be even higher than expected, they say.
The Commission now expects euro area inflation to rise to 7.6% in 2022, on average, significantly higher than its May estimate of 6.1% for the year, due to soaring energy prices.
He also expects inflation to hover around 4% next year – still double official targets – up from May forecast 2.7%.
Growth prospects also weakened as rising prices hit demand, while fears of winter energy shortages rattled confidence.
Eurozone GDP is now expected to increase by 2.6% this year and 1.4% in 2023, reports Bloomberg, down from May forecasts for gains of 2.7% and 2.3%.
The forecasts could still change before they are officially released. But, Valdis Dombrovskyexecutive vice president of European Commissionhas already warned that there will be downgrades, telling reporters on Monday that:
“What we see [is that] economic growth is proving to be quite resilient this year, but we can still expect a downward revision and even more for next year due to many uncertainties and risks.
“Unfortunately, inflation continues to surprise on the upside, so it will once again be revised upwards.”
Europe fears that Russia will not turn the Nord Stream 1 gas pipeline back on later this month when its current maintenance is complete. This could lead to soaring bills, energy rationing and economic turbulence this winter.
Recession fears helped push the euro below parity with the US dollar yesterday for the first time since 2002.
The euro has risen to just over $1. European stock markets are expected to open slightly higher after taking a jolt yesterday when US inflation hit a new 40-year high of 9.1%.
We also get the latest real-time data on the UK economy today, as well as weekly US unemployment figures and data showing how fast US factories are rising prices.
- 9.30am BST: Inquiry into Bank of England credit conditions
- 9.30am BST: The latest real-time indicators of economic activity and social change from the ONS
- 10am BST: European Commission to release latest economic forecast
- 1.30pm BST: Weekly US unemployment figures
- 1.30pm BST: US PPI measure of producer price inflation