The Institute of International Finance lowered its global production growth forecast for 2022 in half, citing the economic consequences of Russia’s invasion of Ukraine, China’s response to a COVID-19 wave, and US monetary policy tightening.
Capital flows to developing markets are also expected to drop by 42% from last year, according to the IIF.
IIF cut its forecast for global GDP growth to 2.3% from 4.6%, with the G3 – the United States, euro area, and Japan – growing at a 1.9% rate this year.
They expect China’s growth to decelerate to 3.5% from 5.1% in the previous estimate.
The IIF cautioned there was a wide risk of global food insecurity, with the Middle East and Africa likely to be the hardest hit.
Capital flows to emerging markets are expected to slow “significantly” from $1.68 trillion last year, according to the latest IMF report. Russia is seen posting outflows of about $29 billion after taking in over $58 billion last year. Mexico, Argentina, and Venezuela are among the few Latin American countries expected to see total flows rise this year.
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