The International Monetary Fund (IMF) revised its global growth forecast for the 2023 and 2024. According to its latest update economy will grow at 2.9% in 2023 and at 3.1% in 2024. The global economy grew at 3.4% in 2022.
The director of the research department at the IMF Pierre-Olivier Gourinchas said, “Growth will remain weak by historical standards, as the fight against inflation and Russia’s war in Ukraine weighs on activity.”
The current outlook by IMF turned more positive in comparison to its earlier projections on the global economy because of better-than-anticipated domestic factors in several economies and reduction in inflationary pressures.
Gourinchas said, “Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe.”
In addition, China announced the reopening of its economy after strict Covid lockdowns, which is expected to contribute to higher global growth. A weaker U.S. dollar has also brightened the prospects for emerging market countries that hold debt in foreign currency.
IMF Managing Director Kristalina Georgieva said, “The picture is not totally positive yet. We have to be cautious. Economy is not as some feared but less bad doesn’t quite yet mean good.”
IMF reported that about 84% of nations will face lower inflation in 2023 compared to 2022. Its forecast says that there will be 6.6% annual inflation rate in 2023 and of 4.3% in the 2024.
IMF report says, “Clear central bank communication and appropriate reactions to shifts in the data will help keep inflation expectations anchored and lessen wage and price pressures. Central banks’ balance sheets will need to be unwound carefully, amid market liquidity risks.”