The growth of the global economy is grappling with challenges, proving hard for the economies to make leeway for loosening monitoring policies. Situations like inflation, spiking energy prices, natural calamities, and man-made disasters like war and climate change are ballooning, so embattling for most of the world’s economies is becoming difficult.
The statement by International Monetary Fund (IMF) Managing Director (MD) Kristalina Georgieva has come as a beam of light in the darkness. As per Georgieva, there are signs that the global inflation rise in many countries is bending down.
At the same time, Georgieva believes the world economy is “still under a lot of pressure”.
As several countries continue to grapple with surging food and energy prices, the International Monetary Fund (IMF)’s Managing Director Kristalina Georgieva said the world economy is still “in a very difficult place”.
Georgieva, speaking at the World Government Summit panel hosted by CNBC, echoed the Fund’s outlook for this year: “We see inflation finally trimming down in quite a number of countries. The chance of finally getting on top of the problem of the cost of living being a major disrupter for millions and millions of people, we see light at the end of this tunnel.”
Georgieva noted that, even though global economic growth is peaking, the Fund remains cautious of unforeseen contingencies like the Covid-19 outbreak, Russia’s occupation of Ukraine, and the earthquake that hit parts of Turkey and Syria.
Growth Forecast:
We project growth in emerging market and developing economies have now bottomed out and will rise modestly from 3.9% in 2022 to 4.0% in 2023 and 4.2% in 2024. More in the #WEO update: https://t.co/DeypiSrmWf pic.twitter.com/zq5P7sWKeb
— IMF (@IMFNews) February 15, 2023
Global growth is predicted to slow down from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, again picking up the pace to 3.1 percent in 2024.
The forecast for the current year is 0.2 percentage points higher than estimated in the October 2022 World Economic Outlook (WEO) but below the historical (2000–19) average of 3.8 percent.
The rise in the key interest rates by central bank rates and Russia’s war in Ukraine continue to weigh down economic activity. The super-spread of coronavirus in China dampened growth in 2022, but the recent reopening has shown a way to have a faster-than-expected recovery.
Global inflation will expectedly slump from 8.8 percent in 2022 to 6.6 percent in 2023, a further 4.3 percent in 2024, still above pre-pandemic (2017–19) levels of about 3.5 percent.
The IMF in January forecasted that global consumer price inflation would ease to 6.6 percent in 2023, compared with 6.5 percent, predicted earlier in October last year.
It said inflation rates are expected to trim this year against 2022 in nearly eight out of ten countries.
Notably, the IMF has done an upward revision of the global growth forecast on the strength of strong US consumer spending and the reopening of China’s economy after relaxing the Zero Covid policy.
We need to “think of the unthinkable,” as we live in “a more shock-prone world” impacted by the Covid pandemic, Russia’s invasion of Ukraine, and the recent earthquake across Syria and Turkey, the IMF MD said.
She continued, “Global growth is slowing down in 2023, but it might be a turning point.”