WEF summit: World economy has 'buffer' against recession, says Gopinath

While the world economy faces headwinds, current growth forecasts offer a buffer against a potential global recession, the International Monetary Fund’s No. 2 official said Monday.

Among the major threats to economic growth, IMF First Deputy Managing Director Gita Gopinath told Reuters that the conflict in Ukraine could escalate, adding: “You could have sanctions and counter sanctions”. 

Gopinath said on the sidelines of the WEF in the Swiss resort of Davos that the other challenges included inflation, a tightening of interest rates by central banks and a slowdown in Chinese growth. 

“So all of these provide downside risks to our forecast,” Gopinath said, with reference to the IMF’s 2022 growth forecast issued last month of 3.6 per cent, a downgrade from a 4.4 per cent estimate in January. read more

“I would say at 3.6 per cent there is a buffer,” she said, conceding, however, that risks are uneven around the world.

“There are countries that are getting hit hard ... countries in Europe that are getting hit hard by the war, where we could see technical recessions,” she added.