IMF raises its global growth forecast for this year

Economy
Thu, 27 Jul 2023 7:53 GMT
The World Economic Outlook Report predicted that the global economy will grow by 3 per cent this year and in 2024.
IMF raises its global growth forecast for this year

The IMF published the July 2023 issue of the World Economic Outlook Report with the title "Short-Term Resilience, Persistent Challenges".

In the report, it was pointed out that the global recovery after the Covid-19 outbreak and Russia's invasion of Ukraine slowed down, and it was pointed out that the forces that prevented last year's growth continued.

Noting that the still high inflation continues to erode the purchasing power of households, the report stated that the policy tightening of central banks against inflation limits economic activity by increasing the cost of borrowing.

The report emphasised that output losses continue to be large, especially for the world's poorest countries compared to pre-pandemic estimates.

The report stated that despite the headwinds, global economic activity was resilient in the first quarter of the year with the effect of the service sector, while non-service sectors, including manufacturing, showed weakness and high-frequency indicators for the second quarter pointed to a broader slowdown in activity.

Warning that inflation may remain high in case of further shocks
In the report, it was noted that international trade and demand and production indicators in the manufacturing sector all point to further weakness, and that excess savings accumulated during the pandemic have decreased in developed economies, especially in the US, which means a thinner buffer to protect against shocks.

The report pointed out that inflation could remain high in case of further shocks such as the intensification of the war in Ukraine and extreme weather events, and underlined that the turmoil in the financial sector could resume as markets adapt to further policy tightening by central banks.

In the report, it was stated that the priority in most economies is to reduce inflation while ensuring financial stability, so central banks should focus on restoring price stability.

The report pointed out that the resolution of the debt limit impasse in the US and the strong steps taken by the authorities to contain the turbulence in US and Swiss banking reduced financial sector risks.

2023 inflation expectation lowered to 6.8 per cent
In the IMF's report, it was stated that the world economy, which is estimated to have grown by 3.5 per cent last year, is expected to grow by 3 per cent in 2023 and 2024.

In the estimates published by the Fund in April, it was predicted that the world economy would grow by 2.8 per cent in 2023 and 3 per cent in 2024.

In the report, it was pointed out that although the growth forecast was higher compared to the previous report, it remained weak by historical standards, and it was emphasised that the increases in policy interest rates made by central banks within the scope of fighting inflation continued to put pressure on economic activity.

It was stated in the report that global headline inflation is expected to fall from 8.7 per cent in 2022 to 6.8 per cent in 2023 and 5.2 per cent in 2024, and core inflation is also expected to gradually decline.

In the IMF's April report, the global inflation expectation was 7 per cent for this year.

US growth forecast revised upwards for this year
In the report, it was reported that the US economy, which is estimated to have grown by 2.1 per cent last year, is expected to grow by 1.8 per cent this year and 1 per cent in 2024.

In the IMF's forecasts in April, it was predicted that the US economy would grow by 1.6 per cent this year and 1.1 per cent in 2024.

It was stated in the report that the growth rate of the Eurozone economy, which was estimated to be 3.5 per cent last year, is expected to decline to 0.9 per cent this year, and the regional economy is expected to grow by 1.5 per cent in 2024.

In the IMF's forecasts in April, it was predicted that the Eurozone economy would grow by 0.8 per cent this year and 1.4 per cent next year.

In the report, it was stated that the German economy, which was previously predicted to shrink by 0.1 percent this year, is expected to shrink by 0.3 percent in 2023, while the growth forecast for the French economy was increased from 0.7 percent to 0.8 percent for this year.

It was noted in the report that the growth forecast for Italy was raised from 0.7 per cent to 1.1 per cent for this year, while the growth forecast for Spain was raised from 1.5 per cent to 2.5 per cent.

In the report, it was noted that the growth forecasts for next year were increased from 1.1 per cent to 1.3 per cent for Germany and from 0.8 per cent to 0.9 per cent for Italy, while they were kept constant at 1.3 per cent for France and 2 per cent for Spain.

It was stated in the report that the UK economy, which was previously predicted to contract by 0.3 per cent this year, is expected to grow by 0.4 per cent, and the growth forecast for the country's economy for 2024 was kept at 1 per cent.

In the report, with these revisions, growth expectations for the developed countries group were increased from 1.3 per cent to 1.5 per cent for 2023, while it was kept at 1.4 per cent for 2024.The growth forecast for the Chinese economy has not changedIn the report, which also included growth forecasts for emerging markets and developing country economies, it was stated that China's economic growth forecast for this year was maintained at 5.2 per cent and the growth forecast for 2024 was maintained at 4.5 per cent.

In the report, it was noted that the growth expectation of the Indian economy was increased from 5.9 per cent to 6.1 per cent for this year and left at 6.3 per cent for next year, while the growth forecast for the Russian economy was increased from 0.7 per cent to 1.5 per cent for this year and remained unchanged at 1.3 per cent for next year.

In the report, it was stated that with these revisions, the growth expectation for emerging markets and developing country economies was increased from 3.9 per cent to 4 per cent for 2023 and reduced from 4.2 per cent to 4.1 per cent for 2024.

Türkiye's growth forecast was raised for 2023In the report, it was noted that the Turkish economy is estimated to grow by 3 per cent this year and 2.8 per cent in 2024.

In the IMF's forecasts in April, the Turkish economy was projected to grow by 2.7 per cent in 2023 and 3.6 per cent in 2024.

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