Charting the Global Economy: IMF Slashes Growth Estimates

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Russia’s war in Ukraine and China’s strict coronavirus restrictions prompted the International Monetary Fund to downgrade global economic growth estimates.

The fund also raised its inflation projections and pointed to an increased risk of price expectations becoming unanchored. Inflationary pressures are restraining some business activity in Europe while adding to instability in Africa.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World

The IMF slashed its world growth forecast by the most since the early months of the Covid-19 pandemic, and projected even faster inflation. Global expansion will slow to 3.6% in 2022, down from a forecast of 4.4% in January before the war, the fund said.

A barrage of shocks is building that’s unlike anything emerging markets have had to confront since the 1990s, when a series of rolling crises sank economies and toppled governments. Turmoil triggered by rising food and energy prices is already gripping countries like Sri Lanka, Egypt, Tunisia and Peru. It risks turning into a broader debt debacle and yet another threat to the world economy’s fragile recovery from the pandemic.

Europe

Companies in Europe’s two largest economies are increasingly concerned that rising prices will add to disruptions in business activity, with Germany already seeing growth weakening at the start of the second quarter.

U.K. retail sales plunged more than forecast in March as the cost-of-living crisis squeezed incomes and consumers braced for higher taxes and energy bills.

The German economy is at risk of shrinking nearly 2% this year if the war in Ukraine escalates and an embargo on Russian coal, oil and gas leads to restrictions on power providers and industry, according to the Bundesbank.

Asia

China reported its biggest decline in consumer spending and worst unemployment rate since the early months of the pandemic as Covid lockdowns put a strain on the world’s second-largest economy, adding another threat to global growth.

Investors aren’t buying the Chinese government’s bullish rhetoric and promises of support for an economy paying the price for its stringent Covid Zero strategy. The bigger worry is the latest upsurge in Covid cases and more disruptions of the kind that shut down Shanghai for weeks, concerns that have eclipsed authorities’ pledges for market support and policy easing.

U.S.

U.S. consumers haven’t let soaring gas prices, interest-rate hikes or the latest Covid variant slow them down. The country’s largest banks said spending on their credit cards surged in the first quarter as customers began traveling and dining out again after years of pandemic lockdowns.

The gas market, once considered a yawn among traders because of its predictability, could be setting the stage for a even wilder rally over the next few months, triggering bets on prices that would have seemed unimaginably high just a few months ago.

Emerging Markets

The heads of the world’s biggest international finance institutions sounded the alarm about record global debt levels, with the International Monetary Fund’s chief saying options to deal with the billions owed by poor nations are disappearing.

Russia’s invasion of Ukraine has driven up the price of the oil products, grain and fertilizer that many African nations depend on. A conflict in Ethiopia has derailed the economy of the continent’s second-most populous nation, and the wider Horn of Africa region is now in the worst drought in 40 years. Unprecedented floods and a surge in power outages have hobbled South Africa.

©2022 Bloomberg L.P.