The International Monetary Fund (IMF) will further downgrade its forecast for global economic growth this month.
Kristalina Georgieva, the fund's Managing Director, said the global economic outlook has "darkened significantly", citing that the impact of the war in Ukraine has worsened and that inflation has continued to rise.
"The human tragedy of the war in Ukraine has worsened. So, too, has its economic impact especially through commodity price shocks that are slowing growth and exacerbating a cost-of-living crisis," the IMF head noted in her recent blog.
"Inflation is higher than expected and has broadened beyond food and energy prices."
Countries around the world have tightened their monetary policy in a bid to fight inflation.
Last June, central banks in the UAE and other Gulf countries announced an increase in interest rates, following the US Federal Reserve's decision to raise interest on reserve balances by 75 basis points.
The monetary tightening may be necessary, but it will weigh on economic recovery, according to Georgieva.
She noted that pandemic-related disruptions, which have continued especially in China, have renewed bottlenecks in global supply chains and hampered economic activity. As a result, she said, recent indicators imply a weak second quarter.
"We will be projecting a further downgrade to global growth for both 2022 and 2023 in our World Economic Outlook Update later this month," the IMF head said.
Last April, the IMF had already cut its 2022 and 2023 forecast for global growth to 3.6 percent.
"Indeed, the outlook remains extremely uncertain. Think of how further disruption in the natural gas supply to Europe could plunge many economies into recession and trigger a global energy crisis. This is just one of the factors that could worsen an already difficult situation," Georgieva said.
"It is going to be a tough 2022 and possibly an even tougher 2023, with increased risk of recession."
She urged world leaders, especially G20 ministers and central bank governors, to take a "decisive action and strong international cooperation" to "navigate this sea of troubles".
She said central banks will need to continue to tighten monetary policy to bring down high inflation.
Economies facing high debt levels will also need to tighten their fiscal policy to lower the burden of increasingly expensive borrowing and complement monetary efforts to tame inflation.
"In countries where recovery from the pandemic is more advanced, shifting away from extraordinary fiscal support will help tamp down demand and thus reduce price pressures," she said.
(Reporting by Cleofe Maceda; editing by Seban Scaria)