The International Monetary Fund's latest economic outlook was admittedly a bit of a downer, with the agency downgrading its growth forecast for the global economy due to a "tightening financial conditions" and a "cost-of-living crisis" that is worse than expected. 
"In short, the worst is yet to come, and for many people 2023 will feel like a recession," wrote Pierre-Olivier Gourinchas, economic counselor for the IMF, in the report. 
Here's a breakdown of what was in the report:
  • Global growth is projected to decline from 6 percent in 2021 to 3.2 percent growth in 2022 and 2.7 percent in 2023.
  • That is down from an impressive 6.1 percent growth in 2021, and 0.2 percentage points lower than the IMF's forecast three months ago.
  • Inflation is set to hit 8.8 percent in 2022, up from 4.7 percent in 2021, but will decline to 6.5 percent by 2023 and 4.1 percent by 2024.
The agency also didn't mince words when it comes to potential risks, listing out a series of chilling what-if scenarios that are worthy of the spooky season.  
  • Dollar appreciation could intensify global tensions.
  • Energy and food price shocks could add fuel to inflation. 
  • Monetary tightening could trigger an international debt crisis.
  • Another COVID spike could bring economic growth to a halt.
  • "Geopolitical fragmentation" could make addressing climate change difficult. 
All that being said, the IMF is sticking with the consensus on how to respond to these challenges. The agency advocated that countries should continue to raise interest rates to rein in inflation, and deal with the downside of tighter conditions by helping consumers.
"Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy," the agency wrote.