Global growth is expected to slow further next year, the IMF said on Tuesday, lowering its forecasts as countries grapple with the fallout from Russia’s invasion of Ukraine, rising cost of living and economic downturns.

The global economy has taken several hits, with the war in Ukraine sending food and energy prices soaring in the wake of the coronavirus outbreak, while rising costs and rising interest rates threaten to impact around the world.

“This year’s shocks will reopen economic wounds that were only partially healed in the wake of the pandemic,” International Monetary Fund economic adviser Pierre-Olivier Gourinchas said in a blog post on the fund’s latest World Economic Outlook.

More than a third of the global economy is headed for a contraction this year or next, and the three largest economies — the United States, the European Union and China — would continue to falter, he warned.

“The worst is yet to come and for a lot of people, 2023 will feel like a recession,” Gourinchas said.

In its report, the IMF lowered its global GDP forecast for 2023 to 2.7 percent, 0.2 points below July expectations.

The world growth forecast for this year remains unchanged at 3.2 percent.

The global growth profile is the “weakest” since 2001 barring the global financial crisis and the worst of the pandemic, the IMF said.

This reflects slowdowns for the largest economies, including a contraction in US GDP in the first half of 2022 and ongoing lockdowns in China as it faces a housing market crisis.

A key factor behind the slowdown is a change in policy as central banks look to curb rising inflation, with higher interest rates beginning to dampen domestic demand.

Growing price pressures are the most immediate threat to prosperity, Gourinchas said in the report, adding that central banks are now “laser-focused on restoring price stability”.

Global inflation is expected to peak at 9.5 percent this year before falling to 4.1 percent by 2024.

A misperception of inflation’s persistence could prove detrimental to future macroeconomic stability, he warned, “by seriously undermining central banks’ hard-won credibility.”

When asked about the Federal Reserve’s rate hikes, Gourinchas said at a news conference Monday that the IMF isn’t calling for an acceleration, but that also “doesn’t mean they should pause on the path…that we’ve seen.”

That’s because banks started from a point where interest rates were historically low as countries emerged from the pandemic, he said.

The current challenges don’t mean a major downturn is inevitable, but the fund also warned that many low-income countries are either facing or on the verge of a debt crisis.

Progress on debt restructuring for those most affected is needed to avoid a spate of the sovereign debt crisis.

“Time may be running out soon,” Gourinchas said.

While the G20 have agreed on a “common framework” for debt restructuring of the poorest countries, only three have qualified and “further progress is needed,” he told reporters.

The IMF has also lowered forecasts for the world’s two largest economies, the United States and China.

US economic growth for this year now stands at 1.6 percent, 0.7 points below the fund’s July forecast, on an “unexpected contraction in real GDP in the second quarter,” the IMF said.

“Shrinking real disposable income continues to weigh on consumer demand and higher interest rates are taking a significant toll on spending,” the report added.

The Federal Reserve has aggressively raised interest rates to curb rising inflation, which is slowing economic activity. And the central bank has said more hikes are likely to come.

A slowdown in the euro zone is expected to deepen next year, with the German and Italian economies contracting slightly, the IMF projects.

China’s economy is expected to grow just 3.2 percent this year — the lowest rate in decades barring the initial coronavirus outbreak.

The fund warned that a deepening slump in China’s real estate sector could spill over into the domestic banking sector and weigh heavily on growth.