(MENAFN) According to a report by the Institute of International Finance, the risk of a global recession is "rising sharply" as a result of a number of "shocks," such as the impact of the conflict between Russia and Ukraine on the eurozone, the uncertainty caused by the coronavirus epidemic in China, and the sharp tightening of United States financial conditions.
The IIF stated that its initial forecast was concentrated on the eurozone, where the Ukraine conflict was slowing growth, and on China, where coronavirus lockdowns were causing growth to stagnate in the second quarter of the year. The IIF first raised concerns about the possibility of a global recession six weeks ago.
According to IIF's report, “the combination of these two things was already enough to put our global growth forecast for 2022 near zero, adjusting for sizeable statistical carry-over from last year.”
It noted, “since we made this forecast, however, it has been US data that has surprised to the downside the most. This is driven by the sharp tightening in US financial conditions, with mortgage rates seeing their biggest rise — in real terms — in over 15 years. The rapid slowdown in the US pushes our global growth forecast from near zero into outright contraction.”
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