IMF terms world ‘surprisingly resilient’, raises global growth forecast

- Advertisement -

Colombo Sri Lanka (Commonwealth Union)_The International Monetary Fund has raised global growth outlook for 2023 to 2.9 percent from its original forecast in October 2022 of 2.7 percent, in which it also warned that the world was at risk of going into recession.  With the US and Europe seeing increasing demand, energy costs plateauing and China reopening its economy, the IMF calls the world ‘surprisingly resilient’ and will be seeing a better outlook this year than earlier predicted.

Growth in China slowed to its lowest in 40 years in 2022

Beijing abandoning its strict COVID19 protocols and the west seeing a strengthening of its economy were the two key factors in heralding this change in forecast by the IMF, which now seems upbeat for 2024 as well, stating that global growth will see an acceleration to 3.1 percent in 2024.  However, it does caution that interest rate hikes by central banks globally will slow demand, although recession risks have subsided.  Central banks have also been proactive in controlling inflation although the Ukrainian war and China’s continuing fight against COVID19 could see an uptick in disruptions.

With stronger consumer demand in the US, the IMF believes GDP growth will go up to 1.4 percent this year from 1 percent forecast in October 2022.  The US closed 2022 with a growth of 2 percent. A number of factors contributed to the changing trend including higher consumption, strong consumer balance sheets, increased investment and a robust labour market.

The growth forecast for the Eurozone bloc in 2023 is at 0.7 percent, a marginal increase from October’s prediction of 0.5 percent, resulting from higher energy costs decreasing quicker than expected and energy prices also easing. Growth yet remains dismal with only a marginal increase. 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 UK is the only advanced economy which is due to go into recession this year, shrinking 0.6 percent due to higher interest rates and tightening spending patterns squeezing growth.

India will see a dip in growth in 2023 but will rebound in 2024
 

Asia’s two powerhouse economies are billed to contribute more than 50 percent to global growth this year. China has had a sharp upward movement to 5.2 percent in 2023 from the forecast of 4.4 percent in October.  The country’s zero-COVID strategy held the economy back resulting in a growth rate of just 3 percent in 2022, which for the first in more than forty years was well below the global average.  India in the meanwhile is looking at a dip in 2023 to 6.1 percent but will rebound to 6.8 percent in 2024, much like its 2024 growth performance.

Risks remain however – more widespread COVID19 outbreaks and real estate turmoil in China, escalation of the war in Ukraine leading to spikes in energy and food prices and central banks having the hard task of keeping inflation down are the non-predictable short term risks the world may have to contend with. But the stash of unused savings will sustain demand growth particularly in travel and tourism and labour market pressures easing in some advanced economies will help cool inflation and the reasoning for galloping interest rate hikes.

Hot this week

India Eyes Global Copper Mines in Massive Push to Secure Metal Future

(Commonwealth_India) India has introduced a strategic initiative to attract...

Asia-Pacific Space Race Heats Up—And AWS Just Handed Startups the Fuel

Amazon Web Services (AWS) has launched a new program...

Britain’s Bold Climate Pivot: Can Green Finance Save Lives—and the Economy?

(Commonwealth_Europe) The UK government has announced a major new...

TikTok Bows to Canada’s Crackdown — But at What Cost to Creators and Cultural Institutions?

Commonwealth_ TikTok announced it was pulling sponsorship of some...

20+ Bullets Fired at Hindu Temple in Utah — Community Fears Rise as Hate Crime Suspected!

Global (Commonwealth Union) _ The Sri Sri Radha Krishna...
- Advertisement -

Related Articles

- Advertisement -sitaramatravels.comsitaramatravels.com

Popular Categories

Commonwealth Union
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.