In the wake of the recent banking crisis, the International Monetary Fund (IMF) lowered its global growth forecast for 2023.
According to the updated World Economic Outlook report, gross domestic product (GDP) is forecast to grow 2.8% this year and 3% next year, down from the 0.1% projected in January.
The surprise failures of Silicon Valley Bank (SVB) and Signature Bank and the collapse of Credit Suisse Group AG last month are seen to have added pressure to the existing problems.
It even makes it difficult for the central bank to reduce inflation while maintaining the growth and health of the banking system.
IMF chief economist Pierre-Olivier Gourinchas said there were risks to the downside, largely due to the financial crisis last month.
Although seen under control for now, it is feared that it could result in a more significant decline if the financial situation worsens.
He said, there are some hidden weaknesses from the crisis and the authorities need to examine further and be careful of the risks that may still exist in the banking sector.
Last week, the IMF warned that the world economy is facing its slowest growth since 1990 in the next five years.
