In an update to its World Economic Outlook, the IMF also slashed global GDP growth forecasts for this year, to 3.2%, as GDP already contracted in Q2. The new estimate is down from its forecast of 3.6% made in April.
At 1:36 p.m. ET, WTI was trading at $95.73, down $0.97 (-1.00%) on the day. Brent crude slipped to $104.80, down $0.31 (-0.29%) on the day, with a wide gap between the two benchmarks.
The IMF’s view of 2023 on the back of tighter monetary policy was also downgraded to 2.9%--down from its estimate of 3.6% made in April.
"The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one," the IMF Chief Economist Pierre-Olivier Gourinchas said at a Tuesday news conference, according to Reuters.
The IMF cautioned that its forecasts were “extraordinarily uncertain” with even more downside risks possible courtesy of higher energy and food prices as a result of the Russia-Ukraine conflict—a recipe that could worsen inflation and trigger even more monetary policy tightening.
In a worse-case—yet “plausible” scenario, Russia could halt gas flows to Europe completely by year end, along with another 30% drop in Russian oil exports, slowing GDP growth even further to 2.6% this year and 2% nextc year.
For 2022 inflation in advanced economies, the IMF sees it reaching 6.6%--up from 5.7% that it predicted in its April forecast.