IMF cuts global growth forecast: The economic stories to read this week

International Monetary Fund logo outside its headquarters during the IMF/World Bank spring meeting in Washington, US, 20 April 2018. REUTERS/Yuri Gripas/File Photo

The IMF has lowered its global growth forecast. Image: REUTERS/Yuri Gripas

Joe Myers
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  • This weekly wrapper brings you the latest stories from the world of economics and finance.
  • Top economy stories: IMF cuts its global growth forecast for 2022 and 2023; Record-breaking funding year for African start-ups; IMF and World Bank warn about record debt levels.

1. Top global economy news stories

Russia is moving to reduce foreign control of companies registered in the country. Its central bank says firms registered in Russia that have depositary receipts traded on foreign exchanges must revoke them by 5 May and convert them into local securities.

It comes as inflation in Russia hit its highest since February 2002. The rate stood at 17.49% as of 8 April, up from 16.7% a week earlier.

The international tourism market could take more than three years to return to pre-pandemic levels, New Zealand has warned.

Meanwhile, inflation in New Zealand hit a 32-year high in the first quarter of 2022, reaching 6.9%, according to official government data.

Japan's trade deficit continued in March for an eighth month in a row – its longest run since 2015. The value of the country's imports surged during the month, driven by rising energy prices and a weaker yen.

A Bank of England survey has shown that British lenders expect defaults to rise over the coming months. They also plan to rein in mortgage lending by the biggest amount since the early days of the COVID-19 pandemic.

The International Monetary Fund (IMF) and World Bank have warned about record global debt levels. Options to deal with money owed by the world's poorest nations are disappearing, IMF Managing Director Kristalina Georgieva said.

World's Bank President David Malpass has said he expects major economies to make a "strong effort" to reduce their dependence on Russia for energy supplies and China for supply chains – although cross-border trade and investment flows would continue.

The average interest rate on the most popular US home loan climbed to a 12-year high last week, with fewer homebuyers seeking properties.

Dutch consumer confidence has fallen further amid growing pessimism about the economy, the country's statistics office, CBS, has announced.

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2. IMF cuts global economic growth forecast

The IMF this week cut its global growth forecast by almost a full percentage point. It cited Russia's invasion of Ukraine and warned that inflation is a "clear and present danger" for many countries.

The war is expected to further increase inflation, the IMF said in its latest World Economic Outlook, warning that a further tightening of Western sanctions on Russia to target energy exports would cause another major drop in global output.

Other risks to the outlook include a sharper-than-expected deceleration in China prompted by a flare-up of COVID-19 lockdowns, the IMF said.

Rising prices for food, energy and other goods could trigger social unrest, particularly in vulnerable developing countries, it added.

Global growth has been revised down for 2022 and 2023
The war in Ukraine has hit the IMF's global growth forecasts. Image: IMF

Downgrading its forecasts for the second time this year, the global crisis lender said it now projects worldwide growth of 3.6% in both 2022 and 2023, a drop of 0.8 and 0.2 percentage points, respectively, from its January forecast.

"What has Russia's invasion of Ukraine cost? A crisis on top of a crisis, with devastating human costs and a massive setback for the global economy," IMF Managing Director Kristalina Georgieva said.

3. Record venture capital for African start-ups last year

African start-ups attracted a record $5.2 billion in venture capital last year, bouncing back from a COVID-induced dip in 2020 with a nearly fivefold increase in investments, according to data from an industry group.

"African start-ups raised more in 2021 alone than in the preceding seven years combined," said a report by the African Private Equity and Venture Capital Association (AVCA), which promotes private investment on the continent.

Much of the investor focus has been on fintech start-ups seeking to meet the needs of the continent's largely unbanked population. The financial sector accounted for 60% of the investments by value and nearly a third of deals by volume, the data compiled by AVCA showed.

Nigeria is a hotbed of new fintech firms and was the leading destination for venture capital in Africa last year, surpassing South Africa, the continent's most developed economy.

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