IMF Predicted Global Economic Growth by 2.8pc in 2023 and 3pc in 2024

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Washington: The International Monetary Fund (IMF) has slightly lowered its outlook for the global economy, but still predicts that most countries will avoid a recession this year despite economic and geopolitical concerns. The IMF expects the global economy to grow by 2.8% this year and 3% in 2024, which is a 0.1 percentage point decline from its previous forecast in January.

The US economy is expected to grow by 1.6% in 2023, which is up 0.2 percentage points from the IMF's previous forecast. However, US growth is then predicted to slow to 1.1% next year, which is up 0.1 percentage points from January. IMF Chief Economist Pierre-Olivier Gourinchas said that the global economy is recovering from the shocks of the pandemic and the Russian invasion of Ukraine.

The IMF's World Economic Outlook (WEO) report paints a gloomy picture of the global economy, with global growth forecast to slow in both the short and medium terms. Close to 90% of advanced economies will experience slowing growth this year, while Asia's emerging markets are expected to see a substantial rise in economic output, with India and China predicted to account for half of all growth.

Low-income countries are expected to suffer a double shock from higher borrowing costs due to high interest rates and a decline in demand for their exports. This could worsen poverty and hunger. The IMF expects global inflation to slow to 7% this year, down from 8.7% last year, according to the WEO forecasts.

The IMF's baseline forecasts assume that the financial instability sparked by the collapse of Silicon Valley Bank last month has been broadly contained by the "forceful actions" of regulators on both sides of the Atlantic. However, Gourinchas added that central banks and policymakers have an important role to play to buttress financial stability going forward.

Almost all advanced economies are still expected to avoid a recession this year and next, including the US and Euro area, which is forecast to grow by 0.8% this year and 1.4% next year, led by Spain. However, Germany is now expected to contract by 0.1% this year, joining the UK as the only G7 economy expected to enter a recession this year. The picture is more positive among emerging market economies, with China forecast to grow by 5.2% this year, but its economic growth is predicted to slow to 4.5% in 2024, as the impact of its reopening from the Covid-19 pandemic fades

 (Courtesy: Dawn and AFP)