IMF sees slightly brighter world economic outlook

The International Monetary Fund (IMF) revised its 2023 global economic forecast upward slightly on Tuesday, pointing to falling inflation rates worldwide and China’s recent reopening for the marginally brighter outlook.

The IMF projected that the global economy will grow by about 2.9 percent in 2023, up about 0.2 percentage points from its last World Economic Outlook report in October. 

This latest projection still represents a slowdown from an estimated 3.4 percent growth rate in 2022. However, the IMF suggested that economic growth will bottom out this year and jump back up to 3.1 percent in 2024.

While these projections remain lower than the average of 3.8 percent growth over the last two decades, the IMF said it does not expect negative growth, which is typically seen during global recessions.

Inflation is expected to continue decreasing worldwide throughout the next two years, falling from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024. However, central banks’ efforts to control inflation continue to “weigh on economic activity,” according to Tuesday’s report.

The ongoing war in Ukraine is also expected to continue to be a limiting factor on economic growth, the IMF noted, and while China’s reopening has “paved the way for a faster-than-expected recovery,” it could also pose a threat to economic growth if its economic recovery were to stall due to poor health outcomes.

“Despite these headwinds, the outlook is less gloomy than in our October forecast, and could represent a turning point, with growth bottoming out and inflation declining,” Pierre-Olivier Gourinchas, the IMF’s chief economist, said in a blog post.