The IMF has improved its forecasts for the world economy, but it is too early to rejoice
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The International Monetary Fund updated its forecasts for the global economy and improved them from the previous publication in October, but warned that the road to recovery is just beginning.
About this it is said in the updated World Economic Outlook.
IMF economists expect the global economy to slow this year and grow by 3.4% in 2022 and 2.9% in 2023 before recovering to 3.1% in 2024. The forecast for 2023 improved by 0.2 percentage points, and for 2024 it deteriorated by 0.1 percentage points.
“Growth will remain weak by historical standards as the fight against inflation and Russia’s war in Ukraine will put pressure on activity,” the IMF notes, adding that next year could be a turning point when growth bottoms out and inflation declines.
The improvement in the forecast is due to the resilience of economies in the third quarter of last year thanks to strong labor markets, stable household consumption and business investment, as well as a better-than-expected adaptation to the energy crisis in Europe.
In addition, the sudden opening of China’s economy this year paves the way for a faster recovery in activity. Global financial conditions improved as inflationary pressures began to ease.
For countries with developed economies, the slowdown will be more pronounced: from 2.7% last year to 1.2% and 1.4% this year and next. Nine out of 10 advanced economies are likely to slow down. In particular, the US is expected to slow down to 1.4% this year, and in the Eurozone – to 0.7%.
Emerging market countries have already passed the “bottom” and are expected to see their growth rise modestly to 4% and 4.2% this year and next.
The IMF says India holds significant sway and, along with China, will account for half of global growth this year, while the US and the eurozone combined account for only a tenth.
“This time, the global economic outlook has not worsened. This is good news, but not enough. The road to full recovery, with sustainable growth, stable prices and progress for all, is just beginning,” the IMF summarizes.
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