The International Monetary Fund warned on Tuesday that the world could soon be on the verge of a global recession as economic slowdowns in the US, Europe and China along with twin food and energy crises weighed heavily on growth.
In an update of the World Economic Outlook, the I.M.F. said economic prospects had darkened significantly in recent months as war in Ukraine, inflation and a resurgence of the Pandemic wreaked havoc across the globe. The world economy is facing one of its weakest years since 1970 if the threats continue to intensify.
Pierre-Olivier Gourinchas, the I.M.F.'s chief economist, wrote in a post that the world may be on the verge of a recession. He wrote that the outlook for the global economy is becoming more gloomy.
According to the I.M.F., global growth will fall from 6.1 percent last year to 3.2 percent in the next four years. Growth is expected to slow next year as the world's central banks raise interest rates.
The I.M.F. anticipated inflation to be less than it is today. It expects prices to go up in rich countries and in developing countries.
I'm worried about the outlook. With persistently high inflation, rising consumer prices and declining spending, the American economy is showing signs of slowing down. There are other measures that signal trouble.
The consumer is confident. In June, the University of Michigan's survey of consumer sentiment hit its lowest level in its 70 year history, with nearly half of respondents saying inflation is hurting their standard of living.
There is a housing market. Construction of new homes is slowing. As interest rates rise and real estate companies lay off employees, these trends could continue.
There is a substance called copper. A commodity seen by analysts as a measure of sentiment about the global economy because of its widespread use in buildings, cars and other products is down more than 20 percent since January.
There is oil Because of supply constraints caused by Russia's invasion of Ukraine, crude prices are up this year, but they have recently started to fall as investors worry about growth.
The bond market is a place to buy and sell bonds. Long-term interest rates in government bonds have fallen below short-term rates. It shows that bond investors think the economy is going to slow down.
According to the I.M.F., the risks to the outlook are overwhelmingly tilted to the downside.
The economic storm is the result of diminished consumer spending power in the United States, the impact of Russia's invasion of Ukraine on Europe's economies, and the property crisis in China.
The forecasts of the I.M.F. are subject to a lot of uncertainty. It pointed to the possibility of a sudden shutdown of Russian gas flows to Europe, the persistence of inflation in China and more as threats.
Mr. Gourinchas said that the United States and the euro area would experience near-zero growth next year.
The likelihood of a global recession is increasing. The probability of a recession in one of the Group of 7 advanced economies is four times higher than usual. The I.M.F. defines a recession as two consecutive quarters of negative growth.
The data is expected to show that the US economy did not grow in the second quarter.
The Federal Reserve is expected to raise interest rates on Wednesday in order to slow the economy and tame inflation. The Fed is aiming for a soft landing in which it cools the economy just enough without tipping it into a recession.
The darkening economic prospects in the United States and abroad pose a problem for President Biden and the Democrats in the upcoming elections.
Mr. Biden said that the United States was not in a recession.
He pointed to the low unemployment rate and the hope that growth will remain steady even as it slows. I don't believe we're going to see a recession.
The I.MF noted that growth in the United States had been weaker than expected in the first half of the year due to inflation and higher borrowing costs.
Russia's economy is expected to shrink 6 percent this year, instead of the previously predicted 8.5 percent. According to the I.M.F., Russian oil and nonenergy exports are holding up better than expected.
The I.M.F. report said that domestic demand is showing some resilience because of the effect of the sanctions on the domestic financial sector.
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