Global economic growth is predicted to fall from 3.5 percent in 2022 to three percent both in 2023 and 2024, according to the World Economic Outlook report published by the International Monetary Fund (IMF). The global recovery from the pandemic and Russia’s invasion of Ukraine is slowing amid widening divergences among economic sectors and regions.
The growth projection for 2023 has been upgraded by 0.2 percentage points compared to the previous expectation in the April 2023 report. However, the forecast growths for 2023 and 2024 remains well below the historical annual average of 3.8 percent.
The IMF stated in the report that advanced economies continue to drive the decline in global growth in 2023, with weaker manufacturing performances. For advanced economies, growth is projected to decrease to 1.5 percent in 2023 from 2.7 percent in 2022 and be at 1.4 percent in 2024.
In developing economies, the growth outlook is stable for 2023 at four percent and is expected to slightly increase to 4.1 percent in 2024, although with notable shifts across regions. On a year-on-year basis, global growth bottomed out in the fourth quarter of 2022, though, in some major economies, it is not expected to bottom out before the second half of 2023.
The IMF added that Inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events. Saying that the priority in most economies remains achieving sustained disinflation while ensuring financial stability, the IMF stated that central banks should remain focused on restoring price stability and strengthen financial supervision. The IMF added that improvements to the supply side of the economy would facilitate a smoother decline of inflation toward target levels.