The heads of the International Monetary Fund and World Bank warned of a rising risk of a global recession as advanced economies slow and faster inflation forces the Federal Reserve to keep raising interest rates, adding to the debt pressures on developing nations.
In the U.S., the world’s largest economy, the labor market is still very strong but is losing momentum because the impact of higher borrowing costs is “starting to bite,” IMF Managing Director Kristalina Georgieva said Monday. The euro zone is slowing as natural gas prices soar, as is China due to COVID-19 disruptions and volatility in the housing sector.
The IMF calculates that about one-third of the world economy will have at least two consecutive quarters of contraction this year and next, and that the lost output through 2026 will be $4 trillion.
