Canada dodges the worst as IMF slashes global growth outlook

The International Monetary Fund slashed its growth forecast for the global economy Tuesday, but Canada managed to escape with only a modest downward revision to its GDP outlook.

The International Monetary Fund (IMF) slashed its growth forecast for the global economy Tuesday, but Canada managed to escape with only a modest downward revision to its GDP outlook.

In its World Economic Outlook, the IMF said it now sees the global economy growing 3.6 per cent in 2022 and 2023, marking 0.8 per cent and 0.2 per cent decreases from its January projections. The forecast cut is largely the result of the impact of Russia’s invasion of Ukraine.

In January, the IMF said the global economy was on the mend from the pandemic. But since then, “the outlook has deteriorated,” Pierre-Olivier Gourinchas, economic counsellor and director of research at the IMF, said in the report.

“The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake — mainly through commodity markets, trade and financial linkages,” he said.

Other factors at play in the revised outlooks are renewed COVID-related lockdowns in China and a more aggressive tightening of monetary policy by central banks around the world.

“Overall risks to economic prospects have risen sharply and policy trade-offs have become ever more challenging,” Gourinchas wrote.