IMF raises 2023 global growth forecast

The International Monetary Fund (IMF) has estimated that the global economic growth rate will slow from 3.4 percent to 2.9 percent this year due to the impact of the Russia-Ukraine war and the ongoing fight against inflation. The IMF, which published the quarterly update of the Global Economic Outlook Report, announced its global economic growth forecast for 2023 as 2.9 percent, 0.2 percentage points above the October forecast. The IMF updated the World Economic Outlook Report with the title "Inflation Reaches Its Peak in a Low-Growth Environment." The report stated that central banks' interest rate hikes to combat inflation and the war Russia started in Ukraine continue to suppress economic activity. The report noted that the rapid spread of Covid-19 in China slowed growth in 2022, but that the recent normalization has paved the way for a faster-than-expected recovery. Risks remain on the downside, but have eased The report noted that the balance of risks remains on the downside, but downside risks have eased since the report published in October of last year. Emphasizing that the priority in most economies at a time of cost of living crisis is to reduce inflation sustainably, the report noted that while tighter monetary policy conditions and lower growth potential affect financial and debt stability, macroprudential tools should be introduced and debt restructuring frameworks should be strengthened. The report stated that fiscal support should target those most affected by rising food and energy prices and that broad-based financial aid should be withdrawn. Growth forecast for this year is below historical average despite upward revision The report noted that the world economy is estimated to have grown by 3.4 percent in 2022, and that the growth rate is expected to slow to 2.9 percent in 2023 and then increase to 3.1 percent in 2024. In its report published in October 2022, the IMF had predicted that the global economy would grow by 3.2 percent in 2022, 2.7 percent in 2023, and 3.2 percent in 2024. The report reported that despite the upward revision to the growth forecast for this year, the growth rate remained below the historical average of 3.8 percent. It was noted that global inflation is expected to decrease from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024, but inflation is still above the pre-pandemic levels of 3.5 percent. Upward revision in 2023 growth forecasts for the US and Eurozone economies The IMF's report also shared the countries' updated growth forecasts. Accordingly, the growth forecast for the US economy for 2023 was increased from 1 percent to 1.4 percent. The country's economy's growth forecast for 2024 was also lowered from 1.2 percent to 1 percent. While the Eurozone economy's growth forecast for this year was increased from 0.5 percent to 0.7 percent, the 2024 forecast was revised from 1.8 percent to 1.6 percent. The growth forecast for the German economy, which was previously projected to shrink by 0.3 percent this year, was increased to 0.1 percent, while the growth forecast for the Italian economy, which is similarly expected to shrink by 0.2 percent this year, was raised to 0.6 percent. France's growth forecast for 2023 remained unchanged at 0.7 percent, while Spain's growth expectation was lowered from 1.2 percent to 1.1 percent. Growth forecasts for next year were also lowered from 1.5 percent to 1.4 percent for Germany, from 1.3 percent to 0.9 percent for Italy, and from 2.6 percent to 2.4 percent for Spain. The French economy’s growth forecast for next year was left unchanged at 1.6 percent. It was noted that the UK economy, which was previously projected to grow 0.3 percent this year, is expected to shrink 0.6 percent in 2023. The UK economy’s growth forecast for 2024 was raised from 0.6 percent to 0.9 percent. With these revisions, the growth expectation for the developed country group was increased from 1.1 percent to 1.2 percent for 2023, while it was lowered from 1.6 percent to 1.4 percent for 2024. China’s growth forecast for this year was raised to 5.2 percent According to the report, which also includes growth forecasts for emerging market and developing country economies, China’s economic growth expectation for this year was raised from 4.4 percent to 5.2 percent. The Chinese economy’s growth forecast for 2024 was maintained at 4.5 percent. The growth expectation for the Indian economy this year was kept constant at 6.1 percent, and the growth forecast for next year was kept constant at 6.8 percent. The Russian economy, which was previously estimated to shrink by 2.3 percent this year, was projected to grow by 0.3 percent in 2023. The growth forecast for the Russian economy for 2024 was also increased from 1.5 percent to 2.1 percent. With these revisions, the growth expectation for emerging market and developing country economies was increased from 3.7 percent to 4 percent for 2023, and from 4.3 percent to 4.2 percent for 2024. The growth forecast for the Turkish economy for 2023 was maintained at 3 percent In the IMF report, the growth forecast for the Turkish economy for this year was also maintained at 3 percent, and it was predicted that the country’s economy would grow by 3 percent in 2024. The growth expectation for the Turkish economy in 2022 was determined as 5.5 percent. In its report published in October last year, the IMF predicted that the Turkish economy would grow by 5 percent in 2022.