It's only going to get tougher for global growth this year as economies navigate 'very choppy waters', IMF chief says

• The outlook for the global economy has darkened significantly since April, IMF chief Kristalina Georgieva said.
• She cited the spread of high inflation, big interest rate hikes, China's slowdown and increasing Russian sanctions.

The head of the International Monetary Fund has warned the prospects for global economic growth have become even gloomier in the few months since the IMF slashed its outlook for this year.

Economies worldwide are in very choppy waters, Kristalina Georgieva told Reuters in an interview published Wednesday.

The IMF managing director noted that high levels of inflation are now being seen in more places around the world, and that central banks have started hiking interest rates aggressively to tame it.

She also pointed to the economic slowdown in China, which has grappled with COVID-19 outbreaks, and the increasing sanctions on Russia over its war with Ukraine.

"The outlook since our last update in April has darkened significantly," Georgieva said, speaking to Reuters. "It's going to be a tough '22, but maybe even a tougher 2023."

On the prospects for a global recession, she said: "The risk has gone up so we cannot rule it out."

In April, the IMF chopped its global growth forecast for 2022 to 3.6% from its previous projection for 4.4%. It cited the impact on fuel and food prices from the Ukraine war, also seen as holding back the post-pandemic economic recovery.

The organization is now poised to cut its 2022 growth forecast yet again, according to Georgieva, who said the IMF's economists were still finalizing numbers. In 2021, the global economy grew by 6.1%.

In the US, investors are increasingly concerned that the Federal Reserve is neglecting the risk of a severe economic downturn as it focuses on cooling inflation, which rose to 8.6% in May. The central bank plans a series of interest-rate rises, which it kicked off with a 75-basis point hike, to try to dampen demand to prevent inflation becoming entrenched.

Investment bank Nomura this week said it expects a wave of recessions around the world, including the US. Meanwhile, top economist Mohamed El-Erian has said the market is right to worry the US economy could tumble into a recession in the wake of the Fed's moves.