The Institute of International Finance halved its 2022 global growth forecast, citing the economic fallout from the “Russian invasion” of Ukraine, restrictions imposed by China to contain the wave of COVID-19, and monetary tightening in the United States.
The institute also expects capital flows to emerging markets to decline by 42% year-over-year.
The institute cut its forecast for global GDP growth this year to 2.3% from 4.6% in previous estimates. He expected growth in the US, euro area and Japan to be 1.9%.
He predicted China’s growth would fall to 3.5% from a previous estimate of 5.1%.
“The China wave of Omicron is having a more disruptive impact than we expected and will have a significant impact on growth and capital flows,” the institute said in a report.
He added that capital flows to emerging markets are expected to fall “significantly” to $972 billion from $1.68 trillion last year. Excluding China, the figure drops from $1 trillion to $645 billion.
The Institute expected Russia to see about $29 billion in capital outflows after attracting $58 billion inflows last year. He expects China to raise $327 billion this year, up from $668 billion in 2021.
Source: El Iktisad
