The world economy is entering a “perilous phase” of low economic growth and high financial risk, the International Monetary Fund has warned in its latest set of assessments.
The IMF, which is holding its spring meetings in Washington this week, downgraded its outlook for global growth and said its medium term forecast for economic output was now at the weakest level since the fund began publishing these forecasts in 1990.
However its chief economist Pierre-Olivier Gourinchas added that there were also more severe risks in prospect.
He said: “We are… entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner.”
“Below the surface,” he added, “turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us.
“Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices. But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”
This cocktail of factors prompted the IMF to cut its forecast for global economic growth by 0.1 percentage points this year and next, to 2.8% and 3% respectively.
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Is Brexit to blame? The war in Ukraine? Ed Conway at the end of January taking a look at the IMF predicting the UK economy would end up behind advanced nations this year
However, the fund said that there was now a one-in-four chance of global growth falling below 2% this year, something tantamount to a global recession, and which has only happened five times since 1970 (most recently in 2009 and 2020).
The UK has received an upgrade to its economic growth forecast this year and next, but it is nonetheless forecast to be the worst performing economy in the G7 this year, shrinking by 0.3%. UK gross domestic product is slated to rise to 1% next year.
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The fund’s warnings follow the collapse of Silicon Valley Bank in the US and Credit Suisse in Europe, episodes which have raised the prospect of further financial turbulence in the coming months, as the system responds to rising interest rates.
In the World Economic Outlook, Mr Gourinchas referred to the troubles in the UK pensions market following last September’s mini-budget, saying: “The financial instability last fall in the gilt market in the United Kingdom and the recent banking turbulence in the United States with the collapse of a few regional banks illustrate that significant vulnerabilities exist both among banks and non-bank financial institutions.
“In both cases the authorities took quick and strong action and have been able to contain the spread of the crisis so far. Yet the financial system may well be tested again.”
Yet alongside these immediate concerns, there is another worry haunting policymakers as they gather in Washington for this six-monthly set of meetings: that the global economy may have lost some of its mojo.
The decline in the long term global growth rate in this latest forecast is in part down to “benign” factors – among them the fact that countries like China, which have driven global growth for more than a decade, are becoming higher income nations, with an inherently slower growth rate.
But the other worry they have is that the world is beginning to deglobalise, with many countries unravelling their supply chains and introducing new trade barriers.
Those barriers, which are rising faster than ever before, could constrict global productivity, implying weaker growth for the long run.
Responding to the IMF statement Chancellor Jeremy Hunt said:
“Thanks to the steps we have taken, the OBR [Office of Budget Responsibility] says the UK will avoid recession, and our IMF growth forecasts have been upgraded by more than any other G7 country.
“The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone.”
Settlements are illegal under international law and have been condemned by the UN. They are, however, authorised by the Israeli government.
As well as official, government-approved settlements, there are also Israeli outposts.
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Israeli settlers attack Palestinian villages
These are established without government approval and are considered illegal by Israeli authorities. But reports suggest the government often turns a blind eye to their creation.
Israel began building settlements shortly after the 1967 Six-Day War.
The Etzion Bloc in Hebron, which was established that year, now houses around 40,000 people.
According to the Israel Policy Forum, the settlement programme is intended to protect Israel’s security, with settlers acting as the first line of defence “against an invasion”.
The Israeli public appears divided on the effectiveness of the settlements, however.
Image: A Palestinian man walks next to a wall covered with sprayed Hebrew slogans. Pic: Reuters
A 2024 Pew Research Centre poll found that 40% of Israelis believe settlements help Israeli security, 35% say they hurt it, and 21% think they make no difference.
Why are they controversial?
Israeli settlements are built on land that is internationally recognised as Palestinian territory.
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The activists trying to stop Israeli settlers
Sky News has spoken to multiple Palestinians who say they were forced out of their homes by Israeli settlers, despite having lived there for generations.
“They gradually invade the community and expand. The goal is to terrorise people, to make them flee,” Rachel Abramovitz, a member of the group Looking The Occupation In The Eye, told Sky News in May.
Settlers who have spoken to Sky News say they have a holy right to occupy the land.
American-born Israeli settler Daniel Winston told Sky’s chief correspondent Stuart Ramsay: “God’s real, and he wrote the Bible, and the Bible says, ‘I made this land, and I want you to be here’.”
Settlers make up around 5% of Israel’s population and 15% of the West Bank’s population, according to data from Peace Now.
How have things escalated since 7 October 2023?
Since the Hamas-led attacks on 7 October 2023 and Israel’s subsequent military bombardment of Gaza, more than 100 Israeli outposts have been established, according to Peace Now.
In May, Prime Minister Benjamin Netanyahu’s government approved 22 new settlements, including the legalisation of outposts that had previously been built without authorisation.
Settler violence against Palestinians has also increased, according to the UN, with an average of 118 incidents each month – up from 108 in 2023, which was already a record year.
The UN’s latest report on Israeli settlements notes that in October 2024, there were 162 settler attacks on Palestinian olive harvesters, many of them in the presence of IDF soldiers.
Of the 174 settler violence incidents studied by the UN, 109 were not reported to Israeli authorities.
Most Palestinian victims said they didn’t report the attacks due to a lack of trust in the Israeli system; some said they feared retaliation by settlers or the authorities if they did.
Madonna has urged the Pope to go to Gaza and “bring your light” to the children there.
In a plea shared across her social media channels, the pop star told the pontiff he is “the only one of us who cannot be denied entry” and that “there is no more time”.
“Politics cannot affect change,” wrote the queen of pop, who was raised Catholic.
“Only consciousness can. Therefore I am reaching out to a Man of God.”
The Like A Prayer singer told her social media followers her son Rocco’s birthday prompted her post.
“I feel the best gift I can give to him as a mother – is to ask everyone to do what they can to help save the innocent children caught in the crossfire in Gaza.
“I am not pointing fingers, placing blame or taking sides. Everyone is suffering. Including the mothers of the hostages. I pray that they are released as well.”
Image: Pope Leo XIV leads a Mass for young people in Rome. File pic: AP
Pope Leo has been outspoken about the crisis in Gaza since his inauguration, calling for an end to the “barbarity of war”.
“I appeal to the international community to observe humanitarian law and respect the obligation to protect civilians as well as the prohibition of collective punishment, of indiscriminate use of force and forced displacement of the population,” he said in July.
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Gaza: ‘This is a man-made crisis’
WHO chief thanks Madonna
Every child under the age of five in Gaza is now at risk of acute malnutrition, according to UNICEF – “a condition that didn’t exist in Gaza just 20 months ago”.
At the end of May, the NGO reported that more than 50,000 children had been killed or injured since October 2023.
World Health Organisation director general Tedros Adhanom Ghebreyesus thanked Madonna for her post, saying: “humanity and peace must prevail”.
“Thank you, Madonna, for your compassion, solidarity and commitment to care for everyone caught in the Gaza crisis, especially the children. This is greatly needed,” he wrote on X.
Sky News has obtained shocking CCTV from inside the main hospital in the city of Sweida in southern Syria – where our team found more than 90 corpses laid out in the grounds following a week of intense fighting.
Warning this article shows images of a shooting
The CCTV images show men in army fatigues shooting dead a volunteer dressed in medical scrubs at point-blank range while a crowd of other terrified health workers are held at gunpoint with their hands in the air.
The mainly Druze city of Sweida was the scene of nearly a week of violent clashes, looting and executions last month which plunged the new authorities into their worst crisis since the toppling of the country’s former dictator Bashar al Assad.
The new Syrian government troops were accused of partaking in the atrocities they were sent in to quell between the Druze minority and the Arab Bedouin minority groups.
The government troops were forced to withdraw when Israeli jets entered the fray, saying they were protecting the Druze minority and bombed army targets in Sweida and the capital Damascus.
Image: Men in military fatigues enter the hospital.
Image: The hospital volunteer is seen on the floor moments before he was shot
Image: A second man fires with a handgun
Days of bloodletting ensued, with multiple Arab tribes, Druze militia and armed gangs engaging in pitched battles and looting before a ceasefire was agreed.
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The government troops then set up checkpoints and barricades encircling Sweida to prevent the Arab tribes re-entering.
The extrajudicial killing captured on CCTV inside the Sweida hospital is corroborated by eyewitnesses we spoke to who were among the group, as well as other medics in the hospital and a number of survivors and patients.
Image: Body bags in the grounds of hospital
The CCTV is date- and time-stamped as mid-afternoon on 16 July and the different camera angles show the men (who tell the hospital workers they are government troops) marauding through the hospital; and in at least one case, smashing the CCTV cameras with the butt of a rifle.
One of the nurses present, who requested anonymity, told us: “They told us if we talked about the shooting or showed any film, we’d be killed too. I thought I was going to die.”
Dr Obeida Abu Fakher, a doctor who was in the operating section at the time, told us: “They told us they were the new Syrian army and interior police. We cannot have peace with these people. They are terrorists.”
Multiple patients and survivors told us when we visited the hospital last month that government troops had participated in the horror which swept through Sweida for days but this is the first visual evidence that some took part in atrocities inside the main hospital.
In other images, one of the men can be seen smashing the CCTV camera with the butt of his rifle – and another is wearing a black sweater which appears to be the uniform associated with the country’s interior security.
One survivor calling himself Mustafa Sehnawi, an American citizen from New Jersey, told us: “It’s the government who sent those troops, it’s the government of Syria who killed those people… we need help.”
Image: Mustafa Sehnawi speaks to Sky’s Alex Crawford
Image: A destroyed tank in Sweida
The government responded with a statement from the interior ministry saying they would be investigating the incident which they “denounced and condemned” in the strongest terms.
The statement went on to promise all those involved would be “held accountable” and punished.
The new Syrian president Ahmed al Sharaa is due to attend the United Nations General Assembly next month in New York – the first time a Syrian leader has attended since 1967 – and what happened in Sweida is certain to be among the urgent topics of discussion.