Slowing Global Economic Growth is Increasingly Evident, High-Frequency Data Show – International Monetary Fund

by | Nov 13, 2022 | Financial

Global economic growth prospects are confronting a unique mix of headwinds,
including from Russia’s invasion of Ukraine, interest rate increases to
contain inflation, and lingering pandemic effects such as China’s lockdowns
and disruptions in supply chains.

In turn, our latest

World Economic Outlook, released last month, lowered our global growth forecast for next year to
2.7 percent, and we expect countries accounting for more than one third of
global output to contract during part of this year or next. Moreover, as we
discuss in our latest report prepared for the Group of Twenty, recent
high-frequency indicators confirm that the outlook is gloomier.

As the Chart of the Week shows, there has been a steady worsening in recent
months for purchasing manager indices that are tracking a range of G20
economies. These survey-based measures gauge the momentum of manufacturing
and services activity.

As the chart illustrates, readings for a growing share of G20 countries
have fallen from expansionary territory earlier this year to levels that
signal contraction. That is true for both advanced and emerging market
economies, underscoring the slowdown’s global nature.

While gross domestic product releases for the third quarter surprised on
the upside in some major economies, October PMI releases point to weakness
in the fourth quarter, particularly in Europe. In China, intermittent
pandemic lockdowns and the struggling real estate sector are contributing
to a slowdown that can be seen not only in PMI data but also in investment,
industrial production, and retail sales. This will inevitably have a

significant impact on other economies

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