WASHINGTON — The International Monetary Fund is now saying that while it expects the global economy to slow this year as central banks continue to raise interest rates to tame inflation, it also suggested that output would be more resilient than previously anticipated and that a global recession would probably be avoided.
The IMF upgraded its economic growth projections for 2023 and 2024 in its World Economic Outlook report, which cited resilient consumers and the reopening of China’s economy as among the reasons for a more optimistic outlook.
The New York Times noted that the fund warned, however, that the fight against inflation was not over and urged central banks to avoid the temptation to change course.
“The fight against inflation is starting to pay off, but central banks must continue their efforts,” Pierre-Olivier Gourinchas, the IMF’s chief economist, said in an essay that was released in conjunction with the report.
According to the IMF report, global output is projected to slow to 2.9% in 2023, from 3.4% last year, before rebounding to 3.1% in 2024, while inflation is expected to decline to 6.6% year from 8.8% in 2022 and then to fall to 4.3% next year.
Fallout from War
“Despite the more hopeful outlook, global growth remains weak by historical standards and the war in Ukraine continues to weigh on activity and sow uncertainty,” the Times reported. “The report also cautions that the global economy still faces considerable risks, warning that severe health outcomes in China could hold back the recovery, Russia’s war in Ukraine could escalate and tighter global financing costs could worsen debt distress.”
Growth in rich countries is expected to be particularly sluggish this year, with nine out of 10 advanced economies likely to have slower growth than they had in 2022, the Times noted.
Forecast for U.S.
The IMF is projecting growth in the United States to slow to 1.4% this year from 2% in 2022. It expects the jobless rate to rise from 3.5% to 5.2% next year, but that it is still possible that a recession can be avoided in the world’s largest economy, according to the IMF.
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