IIF halves global GDP growth forecast, inflows to emerging markets should fall 42% – 05/25/2022

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NEW YORK (Reuters) – The International Finance Institute (IIF) has halved its 2022 global growth outlook, citing the economic impacts of Russia’s invasion of Ukraine and China’s response to the COVID-19 wave. United States of america.

IIF also expects a 42% reduction in capital inflows to emerging markets compared to last year.

Based on its new projections, the group said the risk of a recession has increased as real growth is expected to stall.

“The weakness is widespread and leaves little room for error,” IIF economists wrote in the report. “The risk of a global recession is high. In this context, we expect a significant decline in immigrant flows into emerging markets.”

The IIF lowered its forecast for global GDP growth from 4.6% to 2.3% this year, with the G3 – the US, the eurozone and Japan – growing at 1.9%.

China’s expansion is expected to slow to 3.5% from 5.1% in the previous estimate.

“The Omicron wave in China is more damaging than we expected and will have a significant impact on growth and capital flows,” IIF said.

Eurozone growth was previously reduced from 3% to 1%, mainly due to the effects of the invasion of Ukraine. Meanwhile, Latin America is expected to rise 2% on higher commodity prices.

Capital flows to emerging markets are expected to slow sharply, with inflows from non-residents down to $972 billion from $1.680 trillion last year, the report said.

Estimated inflows into Brazil should be about half that, $55.3 billion.

(Reporting by Rodrigo Campos)

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