IMF maintains 2023 global economic growth outlook, expects inflation to slow gradually

Logo of the International Monetary Fund (IMF)

The International Monetary Fund (IMF) stated that although global economic activity improved this year, it remains generally below pre-COVID levels, particularly in emerging markets and developing countries, according to a report issued today, Oct. 10.

This is due to factors such as the ongoing Russian war in Ukraine affecting global markets, geopolitical conflicts, and the long-term impacts of COVID-19 on the global economy.

“Despite war-disrupted energy and food markets and unprecedented monetary tightening to combat decades-high inflation, economic activity has slowed but not stalled,” IMF's Chief Economist, Pierre-Olivier Gourinchas wrote.

The IMF’s projections for growth and inflation are “increasingly consistent with a ‘soft landing’ scenario… especially in the US,” he continued.

According to Gourinchas, the IMF sees better chances for central banks to control inflation without causing a global recession.

The fund currently expects global economic growth to slow from 3.5% in 2022 to 3.3% in 2023, to reach 2.9% in 2024, a 0.1% decrease from its previous estimate in July.

The IMF upgraded its growth forecasts for the US economy to 2.1% in 2023 and 1.5% in 2024 — an improvement of 0.3% and 0.5% points respectively.

Growth expectations for the Saudi economy were lowered from 1.1% to 0.8% for the current year, with estimates for the next year raised by 1.2% to 4%.

China’s economic growth, as per the fund, is forecast to decline by 0.1% this year and 0.2% in the year after to 5% and 4.2%, respectively. This is due to China's property crisis and declining confidence among consumers and businesses, posing major risks to the global economy despite proven surprisingly resilient.

The IMF sees global inflation decreasing gradually from 8.7% in 2022 to 6.9% this year and then to 5.8% in 2024, due to tighter monetary policies and falling international commodity prices.