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IMF slashes global growth outlook as US, China economies slow

Ongoing Covid-19 lockdowns and a worsening real estate crisis have hindered economic activity in China, while the Federal Reserve's aggressive interest rate hikes are slowing US growth sharply

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IMF slashes global growth outlook as US, China economies slow
GNN Media: Representational Photo

Washington: Surging inflation and severe slowdowns in the United States and China prompted the IMF to downgrade its outlook for the global economy this year and next, while warning Tuesday that the situation could get much worse.

"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," IMF chief economist Pierre-Olivier Gourinchas said.

In its latest World Economic Outlook, the International Monetary Fund cut the 2022 global GDP estimate to 3.2 percent, four-tenths of a point lower than the April forecast, and about half the rate seen last year.

Last year's "tentative recovery" from the pandemic downturn "has been followed by increasingly gloomy developments in 2022 as risks began to materialize," the report said.

"Several shocks have hit a world economy already weakened by the pandemic," including the war in Ukraine which has driven up global prices for food and energy, prompting central banks to raise interest rates sharply, the IMF said.

Ongoing Covid-19 lockdowns and a worsening real estate crisis have hindered economic activity in China, while the Federal Reserve's aggressive interest rate hikes are slowing US growth sharply.

But the IMF offered a stark caveat to the forecasts, cautioning that "risks to the outlook are overwhelmingly tilted to the downside," and if they materialize could push the global economy into one of the worst slumps in the past half-century.

Key among the concerns is the fallout from the war in Ukraine including the potential for Russia to cut off natural gas supplies to Europe, as well as a further spike in prices and a food shortage due to the chokehold the war has on grain supplies that could trigger famine.

In an ominous warning, the WEO said "such shocks could, if sufficiently severe, cause a combination of recession accompanied by high and rising inflation ('stagflation')."

That would slam the brakes on growth, slowing it to 2.0 percent in 2023. The global growth rate has only been slower five times since 1970, the IMF said.

- Inflation priority --

The top priority for policymakers is to rein in soaring prices, even at the cost of inflicting pain on their citizens, the fund said, since the damage caused by allowing inflation to rage out of control would be much worse.

Gourinchas, in a blog post about the report, noted that the "synchronized" moves by major central banks to deal with the inflation threat "is historically unprecedented, and its effects are expected to bite."

"Tighter monetary policy will inevitably have real economic costs, but delaying it will only exacerbate the hardship," he said.

The IMF now sees consumer prices jumping 8.3 percent this year, nearly a full point higher than previously forecast, while emerging market economies face a 9.5 percent increase in consumer prices.

But, "further supply-related shocks to food and energy prices from the war in Ukraine could sharply increase headline inflation."

That would increase the pain for poor nations least able to withstand the shock, where food makes up a larger share of family budgets.

-- US, China slowdown --

While the global economy did a bit better than expected in the first three months of the year, it appears to have "shrunk in the second quarter -- the first contraction since 2020," the IMF said.

The IMF downgraded growth forecasts for most countries, including big revisions for the United States and China, which cut more than a point off the prior forecasts.

The fund now sees US growth this year of just 2.3 percent, amid slowing consumer spending and rising interest rates, and the report said a recession -- defined by two quarters of negative growth -- may already have begun.

China's economy is expected to slow dramatically in 2022, expanding just 3.3 percent -- the lowest in more than four decades other than the 2020 pandemic crisis -- due to Covid concerns and the "worsening crisis" in the property sector, the report said.

"The slowdown in China has global consequences: lockdowns added to global supply chain disruptions and the decline in domestic spending are reducing demand for goods and services from China's trade partners," the report said.

There were some exceptions to the gloomy outlook, including upgrades for Italy, Brazil and Mexico, as well as for Russia which is still expected to contract but is benefitting from rising oil prices due to Western sanctions, the WEO said.

SOURCE: AFP

Pakistan

Rain-wind, thundershower expected in most parts of country

Heavy falls are also likely at scattered places in Sindh, eastern Balochistan and Punjab

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Rain-wind, thundershower expected in most parts of country

Islamabad: Rain-wind/thundershower is expected in Sindh, Balochistan, Punjab, Khyber Pakhtunkhwa, Kashmir and Gilgit-Baltistan during the next twelve hours.

Heavy falls are also likely at scattered places in Sindh, eastern Balochistan, South Punjab and Southern Khyber Pakhtunkhwa during the period.

Temperature of some major cities recorded this morning:  

Islamabad and Peshawar twenty-five degree centigrade, Lahore twenty-eight, Karachi twenty-seven, Quetta twenty-one, Gilgit twenty, Murree seventeen and  Muzaffarabad twenty-two degree centigrade.   

According to Met Office forecast for Indian Illegally Occupied Jammu and Kashmir, partly cloudy/chances of rain-wind and thundershower in Srinagar, Jammu, leh, Pulwama, Anantnag, Shopian and Baramula.

Temperature recorded this morning:          

Srinagar, Anantnag and Shopian nineteen degree centigrade, Jammu twenty-eight, Leh fourteen, Pulwama and Baramula twenty degree centigrade.    

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Pakistan

President urges youth to participate in monsoon plantation drive to cope with climate change

"Pakistan was the eighth country most vulnerable to the negative effects of climate change"

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President urges youth to participate in monsoon plantation drive to cope with climate change

Islamabad: President Dr Arif Alvi on Thursday called for concerted efforts by all segments of society to carry out extensive plantations in a bid to save the country from the horrendous effects of climate change.

In his message on the launch of the national monsoon tree plantation drive, he urged every citizen, particularly youth, to actively participate in the campaign by planting trees in residential areas, on roadsides, and near industrial zones.

President Alvi said Pakistan was the eighth country most vulnerable to the negative effects of climate change.

He mentioned that rising mercury levels were resulting in glacier melting and urban flooding.

During the last 19 years, he said, Pakistan suffered around 173 incidents related to climate change besides the massive destruction this year as well.

The president said as per international standards, a country required 25 percent forest cover, however, pointed out that Pakistan only had 4.8 percent of the green area according to a World Bank report.

He emphasized carrying out plantation at a large scale across the country and mentioned the Ten Billion Tree Tsunami as the largest such plantation project in the country’s history.

Under the project, he said, 1.81 billion trees had been planted by June 2022. By 2023, around 3.29 billion trees will be planted.

President Alvi said 10,000 saplings were planted in the premises of the Aiwan-e-Sadr in 2021, while a Miyawaki forest was also raised at an area of 1.5 acres under the Green Presidency Initiative.

He expressed confidence that an increase in forest cover would help mitigate the effects of climate change in the country and would also control urban flooding.

Also, the extensive plantation would result in the preservation of wildlife and flora and fauna in the country, he added.

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Technology

NASA's new rocket on launchpad for trip to Moon

The SLS rocket is 98 meters (322 feet) tall

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NASA's new rocket on launchpad for trip to Moon

Washington: NASA's giant new SLS rocket arrived at its launchpad Wednesday in Cape Canaveral ahead of a planned flight to the Moon in less than two weeks.

It will be the maiden voyage of the Artemis program -- America's quest to return humans to the Moon for the first time since the last Apollo mission in 1972.

The Artemis 1 mission, an uncrewed test flight, will feature the first blastoff of the Space Launch System rocket, which will be the most powerful in the world.

It will propel the Orion crew capsule into orbit around the Moon, and the spacecraft will remain in space for 42 days before returning to Earth.

Starting in 2024, astronauts will travel aboard Orion for the same trip, and the following year, at the earliest, Americans will once again set foot on the Moon.

The SLS rocket, in development for more than a decade, is 98 meters (322 feet) tall.

On Wednesday it stood at historic launch complex 39B, after a 10-hour overnight crawl from the assembly building.

"To all of us that gaze up at the Moon, dreaming of the day humankind returns to the lunar surface, folks, we're here. We are going back," NASA administrator Bill Nelson said earlier this month.

The Orion capsule will fly to the Moon and 64,000 kilometers (40,000 miles) beyond it -- further than any previous crewed spacecraft.

On the way back through Earth's atmosphere, traveling at 40,000 km per hour (25,000 mph), Orion's thermal shield will have to withstand a temperature that is half that of the surface of the sun.

Liftoff for the Artemis 1 mission is scheduled for August 29 at 8:33 am (1233 GMT). If it has to be postponed due to bad weather, the backup dates are September 2 and 5.

After the 42-day trip, the capsule is supposed to splash down in the Pacific and be picked up by a US Navy vessel.

In 2024, an Artemis 2 mission is scheduled to take astronauts up to orbit the Moon but without landing on it. That honor is reserved for Artemis 3, a mission scheduled for 2025 at the earliest.

The last time people walked on the Moon was with the Apollo 17 mission in 1972.

While the Apollo program featured only white male astronauts, NASA says the Artemis missions will land the first woman and first person of color on the Moon.

The hope is to use the Moon as a staging ground to develop technologies for sending humans to Mars.

SOURCE: AFP

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