The IMF released its World Economic Outlook, projecting global growth to slow from 3.4% in 2022 to 2.8% in 2023 and bottom there, and then rise to 3.0% in 2024. Global inflation is expected to decelerate from 8.7% in 2022 to 7% in 2023 and further to 4.9% in 2024.
Pierre-Olivier Gourinchas, Economic Counsellor and Director of Research at IMF, said in a blog post, “The global economy’s gradual recovery from both the pandemic and Russia’s invasion of Ukraine remains on track. China’s reopened economy is rebounding strongly. Supply chain disruptions are unwinding, while dislocations to energy and food markets caused by the war are receding. Simultaneously, the massive and synchronized tightening of monetary policy by most central banks should start to bear fruit, with inflation moving back towards targets.”
For 2023, global growth projections were reduced by 0.1% compared to January’s forecast. US growth was revised up by 0.2% to 1.6%, Eurozone growth by 0.1% to 0.8%, and UK growth by 0.3% to -0.3%. However, Japan’s growth projection was revised down sharply by 0.5% to 1.3%. Canada and China’s growth forecasts remained unchanged at 1.5% and 5.2%, respectively.
Regarding interest rates, the IMF believes recent increases in real interest rates are likely temporary. Once inflation is under control, advanced economies’ central banks are expected to ease monetary policy and bring real interest rates back towards pre-pandemic levels.
