In its latest report compiled for the G20 summit, the International Monetary Fund (IMF) has downgraded the forecast for the global economy, noting that the “outlook is gloomier” than it had previously expected.

Since January, when it estimated the yearly growth forecast at 3.8% growth, the IMF has been gradually downgrading its forecast. In October, July’s estimate of 2.9% was cut to 2.7%, as the IMF said, “we expect countries accounting for more than one third of global output to contract during part of this year or next.”

Analysts have said there is a 25% chance that the Ukraine conflict as well as the stubborn inflationary environment, will reduce global growth to below 2%. The IMF noted that purchasing manager indices (PMI) which track a range of G20 nations have been steadily worsening in recent months.

In a blog post over the weekend, Tryggvi Gudmundsson, an economist in the IMF’s research department, wrote, “The challenges that the global economy is facing are immense and weakening economic indicators point to further challenges ahead.”

As energy costs skyrocket, and inflation surges as a result, an growing cost of living crisis is buffeting consumers worldwide. The skyrocketing inflation has precipitated interest rate hikes from central banks across the world, making loans more expensive, and slowing economies which were already laboring under inflationary pressures. However regardless, IMF analysts have urged policymakers to “continue to prioritize containing inflation” which is hurting “vulnerable groups the most.”

Emphasizing that the macroeconomic environment is “unusually uncertain,” Gudmundsson said, “Continued fiscal and monetary tightening is likely needed in many countries to bring down inflation and address debt vulnerabilities and we do expect further tightening in many G20 economies in the months ahead.”