IMF lowers 2023 global growth forecast to 2.8%, maintains 5.2% growth forecast for China

The International Monetary Fund (IMF) slightly lowered its outlook for the global economy on Tuesday, saying that the global economy will grow by 2.8 per cent this year. It also predicted that most countries will avoid a recession this year despite economic and geopolitical concerns.

The IMF predicted the global economy will grow by three per cent in 2024, a decline of 0.1 percentage point from its previous forecasts in January.

"The global economy is recovering from the shocks of the last few years, and particularly of course the pandemic, but also the Russian invasion of Ukraine," IMF chief economist Pierre-Olivier Gourinchas said in a press briefing ahead of the release of the IMF's World Economic Outlook (WEO) report.

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In its outlook for the US, IMF said that the American economy is expected to grow by 1.6 per cent in 2023, up 0.2 percentage point on the IMF's previous forecast. US growth will then slow down to 1.1 per cent next year, up 0.1 percentage point from January.

For China, the IMF maintained its growth forecast at 5.2 per cent for this year, saying the country's reopening raised hopes for "positive spillovers" to the rest of the world.

"As Covid-19 waves subsided in January of this year, mobility normalised, and high-frequency economic indicators, such as retail sales and travel bookings, started picking up," the IMF wrote in its World Economic Outlook report.

"The reopening and growth of (China's) economy will likely generate positive spillovers, with even greater spillovers for countries with stronger trade links and reliance on Chinese tourism," it added.

The IMF slightly raised its forecast for economic growth in the eurozone this year but said that it expects a shallow recession in Germany. Its economy will expand by 0.8 per cent, better than the 0.7 per cent growth estimated in January, the IMF said.

However, Germany's economy will likely shrink by 0.1 per cent, a reversal from the slight growth it had forecast in January.

The leadership of the World Bank and IMF hope to use this year's spring meetings to promote an ambitious reform and fundraising agenda.

Looking at the overall picture, the global growth forecast will slow down in both the short and medium terms.

Around 90 per cent of advanced economies are likely to experience slowing growth this year. However, Asia's emerging markets are expected to see a substantial rise in economic output. India and China will account for half of all growth, IMF managing director Kristalina Georgieva said last week.

(With inputs from agencies)

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