The latest projections from the International Monetary Fund (IMF) indicate a heightened concern regarding global inflation. The IMF has revised its estimates, anticipating a 6.9% inflation rate for the current year, with a prediction of 5.8% for 2024. These figures mark a slight increase of 0.1% and 0.6%, respectively, compared to forecasts made three months ago in Washington, DC.
Despite maintaining its 3.0% global real GDP growth prediction for 2023 in the recent World Economic Outlook (WEO), the IMF has adjusted its 2024 forecast downward by 0.1% to 2.9%. The organization attributes this cautious outlook to a slower-than-expected recovery from the lingering impacts of the COVID-19 pandemic and the crisis in Ukraine.
Describing the global economic situation as a “limping” rather than a “sprinting” recovery, the IMF highlights a potential influence on the economy from the recent violence between Israel and the Palestinians.
Pierre-Olivier Gourinchas, the IMF’s chief economist, emphasized the uncertainty surrounding the situation and mentioned the organization’s close monitoring of developments, noting historical instances where crises impacted oil production and transportation in the region.
Significantly, the IMF underscores that the deceleration is more pronounced in developed economies than in emerging and growing markets. The expected slowdown in advanced economies is projected to decrease from 2.6% in the previous year to 1.5% in 2023 and 1.4% in 2024; this is attributed to the faster-than-anticipated growth of the US economy juxtaposed with the Eurozone’s slower-than-expected expansion.
Meanwhile, growth rates in emerging markets and developing economies are anticipated to moderate from 4.1% in 2022 to 4% in 2023 and 2024, with a minor adjustment of 0.1% in 2024. The IMF’s analysis reflects a cautious stance, acknowledging global economic challenges and uncertainties that could impact the recovery trajectory.