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January 31, 2023

IMF (International Monetary Fund) reports World Economic Outlook January 2023


Photo: People walk past the flags outside the IMF building during the 2022 Annual Meetings at the International Monetary Fund. October 12, 2022. Washington, DC, United States. Image provided by & Copyright © IMF. IMF Photo/Ariana Lindquist. [File Photo]




Washington, DC, January 31, 2023 — The global economy is poised to slow this year before rebounding next year. The IMF announced on Monday, January 30, 2023, that it expects global growth to slow from 3.4% in 2022 to 2.9% in 2023. The press briefing was held in Singapore to mark the launch of the January update of the World Economic Outlook report.

“The global economy will slow down this year before rebounding in 2024. But a global recession is not in our baseline. The important factors shaping the outlook are: On the downside, Russia’s war in Ukraine, and the global fight against inflation. On the upside, the reopening of China’s economy. Overall, we have a mild upward revision to our projections. The global economy has shown a lot of resilience. Labor markets are tight, household spending and business investment remain strong, and European economies have proved quite resilient against the energy crisis. Global growth is expected to slow from 3.4% in 2022 to 2.9% in 2023. The slowdown will be more pronounced for advanced economies. China and India will account for 50% of global growth. Global headline inflation is expected to fall from 8.8% in 2022 to 4.3% in 2024. Core inflation, however, is more persistent and remains too elevated. To sum up, barring new shocks, 2023 could be the year of turning points, with growth bottoming out and inflation decreasing,” said Pierre-Olivier Gourinchas, IMF’s Chief Economist.

However, the risks to the outlook remain tilted to the downside, even if adverse risks have moderated since October, and some positive factors seem more relevant.

“The balance of risks to the outlook remains tilted to the downside but is less skewed toward adverse outcomes than in the October WEO. Some upside risks have become more relevant. On the downside, China’s recovery could stall with spillovers to the rest of the world. Inflation could persist at high levels, requiring even tighter monetary policy. An escalation of the war in Ukraine remains a major risk to the global economy. A sudden market repricing could deteriorate financial conditions, especially for emerging and developing economies. On the upside, strong household balance sheets amid tight labor markets and robust wage growth could help sustain private demand. Easing remaining supply bottlenecks and easing labor market pressures could also allow for a soft landing with less monetary tightening,” added Gourinchas.

Gourinchas stressed that the global economic outlook hasn’t worsened, but the road back to a full recovery, with sustainable growth, stable prices, and progress for all, is only starting.

IMF’s Chief Economist concluded that the fight against inflation has started to bear fruit, but the battle is far from won:

Source: IMF


— The editor is an IMF (IMF Institute for Capacity Development, Washington, DC) certified Financial Market Analyst. StumbleUpon reddit Facebook Google Plus Tweet This Seed This on Newsvine

Edited & Posted by the Editor | 6:22 AM | Link to this Post

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