IMF did not change its forecast for Türkiye – Last Minute Economic News

The International Monetary Fund (IMF) published the April issue of the World Economic Outlook Report under the title “Stable but Slow: Resilience Amid Divergence”.

The report stated that economic activity was surprisingly resilient despite global disinflation in 2022-2023, and that “economic activity grew steadily, defying warnings of stagflation and global recession” while global inflation declined from its peak in mid-2022.

The report noted that growth in employment and incomes followed a stable course, reflecting a supply-side expansion amidst supporting demand developments, including higher-than-expected government spending and household consumption, and an unexpected increase in labor force participation.

The report stated that inflation is approaching targeted levels and central banks are turning to policy easing in many economies, and that the tightening of fiscal policies aimed at curbing high public debt through high taxes and decreasing government spending is expected to put pressure on growth.

IT IS EXPECTED TO CONTINUE AT THE SAME SPEED THIS YEAR AND NEXT YEAR

The report emphasized that the world economy grew by 3.2 percent last year and that the growth is expected to continue at the same pace in 2024 and 2025. The growth forecast for this year was revised upwards by 0.1 points compared to the forecast published in January, from 3.1 percent to 3 percent. It was noted that it was increased to .2, and the forecast for next year was kept constant at 3.2 percent.

The report points out that the growth rate is low by historical standards, and this is due to both short-term factors such as still high borrowing costs and withdrawal of financial support, as well as the effects of the Covid-19 epidemic and Russia’s war in Ukraine, the weak increase in productivity and increasing geoeconomic separation. It was stated that it was caused by long-term factors such as

RISKS ARE NOW GENERALLY BALANCED

The report stated that global headline inflation is expected to decrease from the annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, and that the inflation targets of developed economies will be achieved in emerging markets and developing countries. It was reported that it is predicted to reach the economies earlier.

The report pointed out that the global economic growth forecast for the next 5 years is 3.1 percent, the lowest level in recent years, and evaluated that the slowdown in the rate of reaching higher living standards in middle and low-income countries indicates that global economic inequalities continue.

Risks to the global outlook are now generally balanced, the report said, and new price increases resulting from geopolitical tensions, including the war in Ukraine and conflicts in Gaza and Israel, could raise interest rate expectations and depress asset prices, along with persistent core inflation in an environment where labor markets are still tight. A warning was made that it might drop.

The report points out that differences in the speed of fighting inflation among major economies may also cause foreign exchange movements that put pressure on financial sectors, and it is stated that if a comprehensive intervention is not made in the problematic real estate sector in China, growth may stagnate and this may harm its trading partners.

GROWTH FORECASTS OF THE TURKISH ECONOMY WERE KEPT CONSTANT

In the report where the economic growth forecasts of the countries are also shared, the growth forecasts of the Turkish economy for this year and next year have not been changed.

In the IMF report, where the Turkish economy is expected to grow by 3.1 percent this year and 3.2 percent next year, economic activity was predicted to strengthen in the second half of 2024 as monetary tightening ends and consumption begins to recover.

The inflation forecast is 59.5 percent for this year and 38.4 percent for next year, while the unemployment rate in the country is expected to be 9.6 percent this year and next year.

GROWTH FORECAST OF THE US ECONOMY HAS BEEN INCREASED

It was stated in the report that the growth expectation for the US economy was increased from 2.1 percent to 2.7 percent for 2024, and the growth estimate of the country’s economy for the next year was increased from 1.7 percent to 1.9 percent.

The report noted that the growth forecast for the Eurozone economy was reduced from 0.9 percent to 0.8 percent for this year and from 1.7 percent to 1.5 percent for 2025.

The report stated that the growth forecast of Germany, one of Europe’s leading economies, was reduced from 0.5 percent to 0.2 percent for this year and from 1.6 percent to 1.3 percent for next year. It was reported that the expectation was reduced from 1 percent to 0.7 percent for this year and from 1.7 percent to 1.4 percent for next year.

In the report, the growth forecast for the Italian economy was maintained at 0.7 percent for 2024, while it was reduced from 1.1 percent to 0.7 percent for next year.

The report stated that the growth forecast for the Spanish economy was increased from 1.5 percent to 1.9 percent this year, while it was kept constant at 2.1 percent for next year, and the growth forecast for the British economy was increased from 0.6 percent this year. It was recorded that it was reduced to 0.5 percent and from 1.6 percent to 1.5 percent for the next year.

EXPECTATIONS WERE LEFT CONSTANT

In the report, it was stated that in the emerging markets and developing country economies group, the growth expectation for the Chinese economy remains at 4.6 percent for this year and 4.1 percent for next year.

The report stated that the growth expectation of the Indian economy for this year was increased from 6.5 percent to 6.8 percent, and the growth estimate of the country’s economy for the next year was kept constant at 6.5 percent.

In the report, it was reported that the growth forecast for the Russian economy was increased from 2.6 percent to 3.2 percent for this year and from 1.1 percent to 1.8 percent for next year.