MARRAKESH: IMF left its top-line global growth forecast for 2023 unchanged, despite significant underlying differences between regions, while lifting its inflation outlook for next couple of years.

Updated World Economic Outlook (WEO) report, released as International Monetary Fund holds its annual meetings in Marrakesh, maintains global growth estimate of 3.0 percent for this year while cutting 2024 assessment to 2.9 percent, down 0.1 percent from previous forecast in July.

Inflation, which has fallen sharply since last year is predicted to remain elevated at 6.9 percent this year, up slightly from July and 5.8 percent in 2024, up 0.6 percentage points.

Higher inflation could force central banks to keep interest rates higher for longer, which would likely have knock-on effect for global growth. Global economy has shown “Remarkable” resilience as it continues to recover from Covid-19 endemic, Russia’s invasion of Ukraine and cost-of-living crisis, IMF said in WEO.

IMF, World Bank hold first meetings in Africa in 50 years. However, report also noted “Growth remains slow and uneven, with growing global divergences.” “Global economy is limping along, not sprinting,” it warned. Among advanced economies, divergence in economic outlook between Europe and United States is predicted to grow further in coming years.

US economy is now forecast to grow by 2.1 percent this year, up 0.3 percentage points and by 1.5 percent next year, up half percentage point.

Meanwhile, Euro area is forecast to grow by just 0.7 percent this year, down 0.2 percentage points from July and by reduced 1.2 percent in 2024. According to IMF Chief Economist Pierre-Olivier Gourinchas, primary reason is enduring impact of war in Ukraine on energy prices.

Among Europe’s economies, Germany’s outlook has worsened since July, leaving it as only country in G7 group of advanced economies that is expected to enter recession this year or next.

IMF downgraded its growth forecast for China’s economic growth for next two years, saying lower investment due to country’s real estate troubles was “Main contributor.” Russia’s economy has remained more resilient than many economists expected since its invasion of Ukraine began in February last year. Russia’s fiscal deficit is expected to grow to 3.7 percent this year, up sharply from 2022 but significantly lower than its July forecast, according to an IMF spokesperson.

Published in The Daily National Courier, October, 11 2023

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.