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IMF improves global GDP growth forecast to 2.9% in 2023

However, 2024 forecasts deteriorated to 3.1%

WASHINGTON, January 31. /TASS/. International Monetary Fund (IMF) improved its forecast on global GDP growth rate to 2.9% in 2023 and worsened it to 3.1% in 2024, according to the IMF’s World Economic Outlook update.

"Global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, then rise to 3.1% in 2024. The forecast for 2023 is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000-19) average of 3.8%," the report said. The estimate reflects "positive surprises and greater-than-expected resilience in numerous economies". At the same time, the fund worsened its forecast of the rate of global economic development in 2024 by 0.1 percentage points.

The fund estimates that central bank rate hikes around the world to fight inflation and the conflict in Ukraine "continue to weigh on economic activity". These factors, as well as the situation around COVID-19 in China, "dampened growth in 2022, but the recent reopening has paved the way for a faster-than-expected recovery," the report noted. At the same time, the Outlook update points to "signs that monetary policy tightening is starting to cool demand and inflation, but the full impact is unlikely to be realized before 2024."

In addition, the document stresses that "the balance of risks remains tilted to the downside, but adverse risks have moderated". Negative factors include possible "severe health outcomes in China [that] could hold back the recovery." A potential escalation of the conflict in Ukraine could "tighter global financing conditions could worsen debt distress." "Financial markets could also suddenly reprice in response to adverse inflation news, while further geopolitical fragmentation could hamper economic progress," IMF experts said.