The IMF boosted its projection for the pace of consumer price increases across the world to 5.8% for next year in its World Economic Outlook released Tuesday, up from 5.2% seen three months ago.
The International Monetary Fund lifted its global inflation forecast for next year and called for central banks to keep policy tight until there’s a durable easing in price pressures.
Central banks in major economies including the US and European Union have raised interest rates aggressively for more than a year to curb inflation that reached 8.7% globally in 2022, the highest level since the mid 1990s. The fund sees global growth of 2.9% for next year, down 0.1% from its outlook in July, and below the 3.8% average of the two decades before the pandemic. Its forecast for 2023 is unchanged at 3%.
On the other hand, the growth forecast for China, the world’s second-largest economy, was cut to 5% from a 5.2% estimate for 2023 and to 4.2% from 4.5% in 2024. China’s economy is losing momentum because of declines in real estate investment and housing prices that endanger government revenues from land sales, as well as weak consumer sentiment.
There’s also divergence among European economies, with Germany seen contracting more than previously expected amid weakness in interest-rate-sensitive sectors and slower trading partner demand. France, however, had its forecast upgraded after there was a catch-up in industrial production and external demand outperformed in the first half of 2023.
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