IMF’s Gopinath says the global economy has buffer against recession

While the world economy faces headwinds, current growth forecasts offer a buffer against a potential global recession, IMF First Deputy Managing Director Gita Gopinath said

Alessandra Galloni (with inputs from Reuters)
Updated24 May 2022, 12:07 AM IST
Gopinath said other challenges included inflation, a tightening of interest rates by central banks and a slowdown in Chinese growth
Gopinath said other challenges included inflation, a tightening of interest rates by central banks and a slowdown in Chinese growth(Photo: Reuters)

While the world economy faces headwinds, current growth forecasts offer a buffer against a potential global recession, the International Monetary Fund’s No. 2 official said on Monday.

Among the major threats to economic growth, IMF First Deputy Managing Director Gita Gopinath said the conflict in Ukraine could escalate, adding: “You could have sanctions and counter-sanctions”.

Gopinath said in an interview on the sidelines of the World Economic Forum in the Swiss resort of Davos that the other challenges included inflation, a tightening of interest rates by central banks and a slowdown in Chinese growth.

“So all of these provide downside risks to our forecast,” Gopinath said, with reference to the IMF’s 2022 growth forecast issued last month of 3.6%, a downgrade from a 4.4% estimate in January. “I would say at 3.6% there is a buffer,” she said, conceding, however, that risks are uneven around the world.

Gopinath said inflation “will remain significantly above central bank targets for a while”, adding: “It is very important for central bankers around the world to deal with inflation as a clear and present danger; that is something they need to deal with in a very forceful manner”.

“Financial conditions could tighten much more rapidly...And growth in China is slowing,” she added. The US Federal Reserve is leading the charge among central banks, with two rate hikes so far this year. 

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First Published:24 May 2022, 12:07 AM IST
HomeEconomyIMF’s Gopinath says the global economy has buffer against recession

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