IMF downgrades global economic outlook due to 'gloomy,' 'uncertain' climate

July 26 (UPI) -- Calling the world's economic outlook "gloomy and more uncertain," the International Monetary Fund said Tuesday it is downgrading its global economic growth projections for both 2022 and 2023.

The Washington, D.C.-based international financial institution cited rising inflation in the United States and some European markets, as well as the impact of Russia's war in Ukraine as the chief reasons for the downgraded forecast.

"Under our baseline forecast, growth slows from last year's 6.1% to 3.2% this year and 2.9% next year, downgrades of 0.4 and 0.7 percentage points from April," the IMF said in a statement.

"The global economy, still reeling from the pandemic and Russia's invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook."

The IMF noted that key warnings that were detailed in its April outlook are now taking hold.

"Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions," the IMF said.

"China's slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year."

The forecast said that COVID-19 lockdowns are helping to push China's growth down to 3.3% this year, the slowest prepandemic level in more than four decades.

"Inflation has also broadened in many economies, reflecting the impact of cost pressures from disrupted supply chains and historically tight labor markets," the IMF added.

In early June, the World Bank warned of global stagflation that could occur in the face of Russia's war in Ukraine and the lingering effects of COVID-19.