The IMF said global growth would still fall to 2.9% in 2023 from 3.4% in 2022, but its latest forecasts mark an improvement over October’s prediction
The International Monetary Fund on Tuesday raised its 2023 global growth outlook slightly due to “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions.
IMF chief economist Pierre-Olivier Gourinchas said recession risks had subsided and central banks are making progress in controlling inflation, but more work was needed to curb prices and new disruptions could come from further escalation of the war in Ukraine and China’s battle against COVID-19. It said the euro zone had made similar gains, with 2023 growth for the bloc now forecast at 0.7 per cent, versus 0.5 per cent in the October outlook, following 3.5 per cent growth in 2022. The IMF said Europe had adapted to higher energy costs more quickly than expected, and an easing of energy prices had helped the region.
The Fund added that China’s growth will “fall to 4.5 per cent in 2024 before settling at below 4 per cent over the medium term amid declining business dynamism and slow progress on structural reforms.” He acknowledged that China’s reopening would put some upward pressure on commodity prices, but “on balance, I think we view the reopening of China as a benefit to the global economy” as it will help ease production bottlenecks that have worsened inflation and by creating more demand from Chinese households.
But it enumerated more and larger downside risks, including more widespread COVID-19 outbreaks in China and a worsening of the country’s real estate turmoil.
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