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IMF raises global growth forecast as inflation cools


The IMF revised its global economic outlook up.

Norberto Duarte | afp | beautiful pictures

The International Monetary Fund on Monday revised up its global growth forecast for the year, but warned that higher interest rates and Russia’s invasion of Ukraine will likely still affect activity.

In its latest economic update, the IMF said the global economy will grow 2.9% this year – representing an improvement of 0.2 percentage points from its previous forecast in October. However, that number still means down from a 3.4% expansion in 2022.

It also revised down its forecast for 2024 to 3.1%.

Pierre-Olivier Gourinchas, director of IMF research, said in a blog post: “Growth will remain weak by historical standards, given the fight against inflation and Russia’s war in Ukraine. burden on activities”.

The outlook turned more positive for the global economy due to better-than-expected domestic factors in some countries, such as the United States.

“Economic growth proved surprisingly resilient in the third quarter of last year, with a strong labor market, strong household consumption and business investment, and better-than-expected resilience.” wait for the energy crisis in Europe,” Gourinchas said, noting that inflationary pressures have eased.

Global outlook is better but don't be too optimistic, IMF chief warns in Davos

In addition, China has announced the reopening of its economy after the strict Covid-19 lockdowns, which is expected to contribute to higher global growth. weaker U.S. dollar also shed some light on the outlook for emerging market countries holding foreign currency debt.

However, the picture is not entirely positive. IMF Managing Director Kristalina Georgieva warned earlier this month that the economy is not as bad as some feared “but less bad doesn’t mean good.”

“We have to be cautious,” Georgieva said during a CNBC-moderated panel at the World Economic Forum in Davos, Switzerland.

The IMF on Monday warned of a number of factors that could worsen the outlook in the coming months. These include the fact that China’s post-pandemic reopening may be delayed; inflation may remain high; Russia’s protracted invasion of Ukraine could increase food and energy costs; and markets could go awry with worse-than-expected inflation prints.

IMF calculations say about 84% of countries will face lower headline inflation this year than 2022, but they still forecast an average annual rate of 6.6% in 2023 and 4.3% the following year.

As a result, the Washington, DC-based organization said one of the key policy priorities is for central banks to continue to address the rise in consumer prices.

“Clear communication by the central bank and an appropriate response to changes in data will help keep inflation expectations stable and ease pressures on wages and prices,” the IMF said. know in the latest report.

“Central banks’ balance sheets will need to be handled with care, in light of market liquidity risks,” it added.

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