The International Monetary Fund (IMF) is somewhat more optimistic about the growth of the global economy for this year and forecasts a rate of 3%, the same as it also estimates for 2024, according to updated economic projections published this Tuesday.
In the report titled “Short-term resilience” and “persistent challenges”, the Bretton Woods institution revises its forecast for this year by 0.2 percentage points (pp) compared to April’s projections, unchanged for 2024.
Despite the slight improvement, the institution warns that the forecast for 2023-24 remains “well below the historical annual average (2000-19) of 3.8%.”
According to the IMF, advanced economies continue to influence the growth slowdown from 2022 to 2023, with weaker industrial production, as well as idiosyncratic factors, offset by higher services activity.
In emerging markets and developing economies, the growth outlook is broadly stable for 2023 and 2024, albeit with variations across regions.
The IMF explains that the rise in the central bank’s reference rates to fight inflation continues to weigh down economic activity and expects world inflation to drop from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024.
Core inflation is expected to decline more gradually and inflation forecasts for 2024 have been revised upwards.
For the United States, it projects a slowdown in growth from 2.1% in 2022 to 1.8% in 2023 and 1% in 2024, while for the eurozone it projects growth in the eurozone to fall from 3.5% in 2022 to 0.9% in 2023, before rising to 1.5% in 2024.
The IMF estimates that UK economic growth will fall from 4.1% in 2022 to 0.4% in 2023 and rise to 1% in 2024.
For Japan, he forecasts GDP expansion from 1.1% in 2022 to 1.4% in 2023 and 1% in 2024, and estimates that the Chinese economy will grow 5.2% this year and 4.5% in 2024.
The IMF explains that the balance of risks for global growth remains downward, but the adverse risks have decreased since the publication of the April report.
“The resolution of the US debt ceiling tensions reduced the risk of disruptive increases in interest rates on sovereign debt, which would have increased pressure on countries already struggling with rising borrowing costs.
It admits that “more favorable results for global growth than those expected in the baseline scenario have become increasingly plausible”, but on the other hand it points to the persistence of inflation, a lesser-than-expected recovery in China and a deepening of geoeconomic fragmentation as negative risks.
Source: TSF
