WASHINGTON — The International
Monetary Fund said on Monday that the global economy was expected to slow this
year as central banks continued to raise interest rates to tame inflation, but
it also suggested that growth would be more resilient than previously
anticipated and that a global recession would probably be avoided.
اضافة اعلان
The IMF upgraded its economic growth
projections for 2023 and 2024 in its closely watched World Economic Outlook
report, pointing to resilient consumers and the reopening of China’s economy as
among the reasons for a more optimistic outlook.
The fund warned, however, that the fight
against inflation was not over and urged central banks to avoid the temptation
to change course.
The International Monetary Fund said on Monday that the global economy was expected to slow this year as central banks continued to raise interest rates to tame inflation, but it also suggested that growth would be more resilient than previously anticipated and that a global recession would probably be avoided.
“The fight against inflation is starting to
pay off, but central banks must continue their efforts,” Pierre-Olivier
Gourinchas, the IMF’s chief economist, said in an essay that accompanied the
report.
Global output is projected to slow to 2.9
percent in 2023, from 3.4 percent last year, before rebounding to 3.1 percent
in 2024. Inflation is expected to decline to 6.6 percent this year from 8.8
percent in 2022 and then to fall to 4.3 percent next year.
Lessening fears of recessionAfter a succession of downgrades in recent
years as the pandemic worsened and Russia’s war in Ukraine intensified, the IMF
latest forecasts were rosier than those the fund released in October.
Since then, China abruptly reversed its
“zero-COVID” policy of lockdowns to contain the pandemic and embarked on a
rapid reopening. The IMF also said that the energy crisis in Europe had been
less severe than initially feared and that the weakening of the US dollar was
providing relief to emerging markets.
The IMF predicted previously that one-third
of the world economy could be in recession this year. However, Gourinchas said
in a news briefing before the release of the report that far fewer countries
were now facing recessions in 2023 and that the IMF was not forecasting a
global recession.
“We are seeing a much lower risk of recession, either globally, or even if we think about the number of countries that might be in recession.”
“We are seeing a much lower risk of
recession, either globally, or even if we think about the number of countries
that might be in recession,” Gourinchas said.
Ongoing economic challengesDespite the more hopeful outlook, global
growth remains weak by historical standards and the war in Ukraine continues to
weigh on activity and sow uncertainty. The report also cautions that the global
economy still faces considerable risks, warning that “severe health outcomes in
China could hold back the recovery, Russia’s war in Ukraine could escalate and
tighter global financing costs could worsen debt distress.”
Growth in rich countries is expected to be
particularly sluggish this year, with nine out of 10 advanced economies likely
to have slower growth than they had in 2022.
The IMF projects growth in the US to slow
to 1.4 percent this year from 2 percent in 2022. In the euro area, growth is
projected to slow 3.5 percent to 0.7 percent. China is projected to pick up the
slack with output accelerating to 5.2 percent in 2023 from 3 percent in 2022.
“Fragmentation could intensify… and could hamper multilateral cooperation on providing global public goods.”
Russia is also helping to fuel global
growth, suggesting efforts by Western nations to cripple Russia’s economy
appear to be faltering. The IMF predicts Russian output to expand by 0.3
percent in this year and by 2.1 percent next year, defying earlier forecasts of
a steep contraction in 2023 amid a raft of Western sanctions.
A coordinated plan by the US and Europe to
cap the price of Russian oil exports at $60 a barrel is not expected to
substantially curtail its energy revenues.
“At the current oil price cap level of the
Group of 7, Russian crude oil export volumes are not expected to be
significantly affected, with Russian trade continuing to be redirected from
sanctioning to non-sanctioning countries,” the IMF said in the report.
A fragmented world?Among the IMF’s most pressing concerns is
the growing trend toward “fragmentation”. The war in Ukraine and the global
response has divided nations into blocs and reinforced pockets of geopolitical
tension, threatening to hamper economic progress.
“Fragmentation could intensify — with more
restrictions on cross-border movements of capital, workers and international
payments — and could hamper multilateral cooperation on providing global public
goods,” the IMF said. “The costs of such fragmentation are especially high in
the short term, as replacing disrupted cross-border flows takes time.”
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