Global recession risk rising as economic outlook ‘darkens significantly’, IMF says

theguardian.com:

The outlook for the global economy has “darkened significantly” in recent months, the head of the IMF has warned, and the world faces an increasing risk of recession in the next 12 months.

The commodity price shock from the war in Ukraine had exacerbated the cost-of-living crisis for hundreds of millions of people, Kristalina Georgieva said on Wednesday, and it was “only getting worse”.

Inflation was also higher than expected, she said in a blogpost that came on the same day as the latest figures showed that prices in the US rose at a 40-year high of 9.1% in June.

Economists and investors now think the US Federal Reserve could hike interest rates by a historic 1% when its board meets in two weeks’ time.

The Bank of Canada shocked markets on Wednesday by raising its base rate by a full percentage point, while the Reserve Bank of New Zealand increased its benchmark rate by 0.5% this week, as did the Bank of Korea. Singapore’s central bank also tightened its monetary policy on Thursday.

Along with another expected move higher by the Fed, this keeps heaping pressure on other central banks to follow suit to bring inflation under control.

With supply bottlenecks and repeated Covid lockdowns in China also crimping the world’s patchy pandemic recovery, Georgieva said the G20 finance ministers and central bankers gathering in Bali “face a global economic outlook that has darkened significantly”.

“The outlook