IIF slashes global growth forecast in half due to recession fears

IIF slashes global growth forecast in half due to recession fears

The Institute of International Finance (IIF) has cut its 2022 global growth outlook in half, citing the spillover effects of Russia’s invasion of Ukraine, China’s lockdowns in response to resurgent COVID-19 wave and tighter monetary policy in the US.

"We expect global growth of around 2.3 percent in 2022, compared to our earlier forecast of 4.6 percent," IIF said in a new report.

The institution said since it first warned of a recession in the Euro area, the global picture has grown more challenging with the Omicron wave in China set to take a substantial toll on growth and capital flows. “Separately, US financial conditions are tightening rapidly, with the rise in long-term real rates now comparable to the 2013 taper tantrum. Finally, the war in Ukraine is ongoing and could escalate. The confluence of these shocks threatens the global economy and raises the risk of a recession."

The IIF also expects capital flows to emerging markets to slow by 42 percent from last year.

According to the institution, the Ukraine-Russia conflict will significantly impact global growth and inflation via commodity prices, particularly grains and energy, which have soared in recent months.

With Russia and now India banning grains export, and Ukraine likely to see