The International Monetary Fund has improved their forecast for global economic growth by 20 bps in 2023. Their most recent forecast has improved on the previous from 2.7% to 2.9%. This improvement comes after better-than-expected Q3, strong labor markets, good household spending, and a better-than-expected response to the European energy crisis.
Although this can seem to be good news, it doesn't make the number good in the bigger scheme. The 2.9% is still a fall from the 3.4% growth in 2022. Emerging economies may also benefit from the weaker US dollar, especially if they hold debt in a foreign country.
The IMF continues to warn about factors that could influence growth this year. Some of these include the escalation of the War in Ukraine, the slowing of the opening of the Chinese economy, and worse inflation that is expected at this time.
https://www.cnbc.com/2023/01/30/imf-hikes-global-growth-forecast-as-inflation-cools.html
1 comment:
I think the IMF is right to be hesitant about the future growth considering the continuation of the war in Ukraine. Given that the US Dollar is weakening because of high rates of inflation, I'm not sure how much it would actually benefit smaller economies. I am curious what the target for economic growth is because 2.9% is not bad by any means, but considering the previous data of 3.4%, it is a substantial drop.
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