The International Monetary Fund on Tuesday raised its global growth forecast for 2023. The revision to the outlook for the global economy comes on the back of “surprisingly resilient” demand in the United States and Europe, easing energy costs and the reopening of China’s economy after Beijing abandoned tight restrictions stemming from the coronavirus pandemic, Reuters reported.
The IMF said global economic growth would slow to 2.9 per cent in 2023, down from 3.4 per cent in 2022, but its latest projections marked an improvement on its October forecast of 2.7 per cent growth this year.
IMF chief economist Pierre-Olivier Gourinchas said the risk of recession had receded and central banks were making progress in controlling inflation, but further efforts were needed to contain price increases, he pointed out. He also warned that new headwinds could come from the further escalation of the war in Ukraine and China’s fight against the coronavirus.
The IMF expects US GDP growth of 1.4 per cent, up from the 1.0 per cent projected in October; against 2.0 per cent in 2022. The improvement is explained by stronger-than-expected consumption and investment in the third quarter of 2022, as well as a resilient labour market and good consumer conditions.
In the euro area, growth in 2023 is expected to be 0.7 per cent, compared to 0.5 per cent in the October forecast; against 3.5 per cent growth in 2022. According to the IMF, Europe has adjusted to higher energy costs, faster than expected, and the easing of energy prices has helped the region.
The UK was the only advanced economy for which the IMF predicted a recession this year. The reason cited, was that households are struggling with rising living costs, including energy and mortgages.
The Fund revised its forecast for China’s growth in 2023 to 5.2 per cent from 4.4 per cent in its October forecast after the zero-COVID policy in 2022 resulted in China’s growth rate being lowered to 3.0 per cent.
The report said there were “positive surprises” in many economies and “unexpectedly strong resilience” was observed. The IMF does not expect the global economy to plunge into recession this year, which economists had not ruled out in the autumn.