In the July update of its world economic outlook, the International Monetary Fund has raised its forecast for global growth this year, signaling that the underlying economic momentum is stronger than previously believed. The IMF now expects the world economy to grow at 3 per cent in 2023, up 0.2 percentage points from its estimate in April. This upward revision reflects improving prospects across both advanced economies as well as emerging market and developing countries. Alongside, the Fund now expects global inflation to fall from 8.7 per cent in 2022 to 6.8 per cent in 2023, and further to 5.2 per cent in 2024. Core inflation, though, is expected to fall more gradually — from 6.5 per cent in 2022 to 4.7 per cent in 2024. This does suggest that, in parts of the world, interest rates are likely to be higher for longer.
The Fund’s forecasts show that even though growth for advanced economies has been revised upwards for this year, it will slow down from 2.7 per cent in 2022 to 1.5 per cent in 2023. In comparison, emerging economies are expected to sustain their growth momentum — the IMF expects them to grow at 4 per cent this year as well. But, with several economies witnessing significant upward revisions to their growth estimates — for instance, Brazil’s growth forecast has been revised upwards by 1.2 percentage points, Spain by 1 percentage point, Russia by 0.80 percentage points, and UK by 0.70 percentage points — it does indicate that economic activity has across the board proven to be more resilient than previously believed.
