IMF warns of risky global economy

According to the International Monetary Fund (IMF), the world economy is in a "risky phase" as global economic growth is expected to decline due to persistently high inflation. The IMF has revised its forecast for global growth from 2.9 percent in January to 2.8 percent in April. According to this, industrialized nations in particular are growing only slowly, while emerging and developing countries are recording better growth. The IMF has also revised its forecast for Germany downward by 0.2 percentage points compared with January. Overall, a mini-decline in economic output of 0.1 percent is forecast for the country.

However, the outlook is gloomy not only for Germany's economy, but for the global economy in general. Inflation remains a major problem, declining less significantly than initially predicted. The IMF does not currently expect a global downturn, but sees considerable risks that jeopardize economic recovery. The report stresses that central banks must not let up in the fight against high consumer prices, but interest rate hikes risk slowing down the economy.

In its report, the IMF outlines a "plausible alternative scenario" in which global economic growth could fall to 2.5 percent this year if stress in the financial sector continues. That would be the weakest growth since the 2001 global downturn, with the exception of the onset of the Corona pandemic and the 2009 financial crisis. In that scenario, growth in the developed world would be less than one percent.

Overall, therefore, it remains to be seen how the global economy will develop in the coming months. Inflation that does not fall significantly and poses considerable risks will certainly remain a challenge. Central banks must therefore continue to carefully consider how to deal with this situation.