On Tuesday, the International Monetary Fund (IMF) cut its global growth forecast for 2023 amid colliding pressures from the war in Ukraine, high food and energy prices, and sharply higher interest rates. It warned that conditions could worsen significantly next year.

IMF said its latest World Economic Outlook forecasts show that a third of the world economy will likely contract by next year, marking a sobering start to the first in-person IMF and World Bank annual meetings in three years.

As per the forecast, the three largest economies will continue to stall in the United States, China and the euro area. It asserted that, for many people, 2023 would feel like a recession.

The IMF said global GDP growth next year is likely to slow to 2.7 per cent as higher interest rates slow the US economy, Europe struggles with spiking gas prices, and China contends with continued COVID-19 lockdowns and a weakening property sector.

IMF keeps its 2022 growth forecast at 3.2 per cent, reflecting stronger-than-expected output in Europe but weaker performance in the United States after torrid 6.0 per cent global growth in 2021.

US growth this year will be a meagre 1.6 per cent, reflecting an unexpected second-quarter GDP contraction. The IMF kept its 2023 US growth forecast unchanged at 1.0 per cent.

A US Treasury official said before the release of the IMF forecasts that the US economy ‘remains quite resilient, even in the face of some significant global headwinds.’