The IMF expects the global economic growth rate to slow this year

The International Monetary Fund (IMF) has forecast that the global economic growth rate will decline from 3.4% to 2.9% this year due to the war between Russia and Ukraine and the ongoing fight against inflation.

The IMF updated its World Economic Outlook Report with the title “Inflation Spikes in a Low Growth Environment”.

In the report, it is stated that interest rate hikes by central banks to combat inflation and the war launched by Russia in Ukraine continue to suppress economic activity.

The report noted that the rapid spread of COVID-19 in China slowed growth in 2022, but the recent normalization paved the way for a faster-than-expected recovery.

LIT RISKS

The report noted that the balance of risks remained to the downside, but downside risks had receded since the report published in October last year.

The report, which emphasized that the priority in most economies is to reduce inflation sustainably at a time of cost-of-living crises, said that while tighter monetary policy conditions and lower growth potential affect financial and debt stability, macroprudential tools should be introduced and debt restructuring frameworks strengthened.

Financial support must target those most affected by rising food and energy prices, and broad-based financial aid must be withdrawn, according to the report.

BELOW AVERAGE GROWTH NUMBERS

In the report, it was noted that the world economy is estimated to grow by 3.4% in 2022, with the growth rate expected to rise to 3.1% in 2024 after falling to 2.9% in 2023.

In its report published in October 2022, the IMF predicted that the global economy would grow by 3.2% in 2022, 2.7% in 2023, and 3.2% in 2024.

The report reported that despite the upward revision in the growth forecast for this year, the growth rate remained below the historical average of 3.8 percent.

It was noted that global inflation is expected to decline from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, but inflation is still above pre-epidemic levels of 3 ,5 %.

REVIEW OF FORECASTS FOR THE US AND THE EURO REGION

Countries’ updated growth forecasts were also shared in the IMF report. Consequently, the growth forecast for the US economy for 2023 was increased from 1 percent to 1.4 percent. The country’s economic growth forecast for 2024 was also lowered from 1.2 percent to 1 percent.

While the growth forecast for the Eurozone economy for this year was increased from 0.5 percent to 0.7 percent, the forecast for 2024 was revised from 1.8 percent to 1.6 percent.

While the growth forecast for the German economy, previously forecast to contract 0.3 percent this year, was raised to 0.1 percent, the growth forecast for the German economy was similarly raised. Italy, which is expected to contract 0.2 percent this year. at 0.6 percent.

While France’s growth forecast for 2023 remained at 0.7 percent, Spain’s growth expectation was lowered from 1.2 percent to 1.1 percent.

Growth projections for next year were also lowered from 1.5 percent to 1.4 percent for Germany, from 1.3 percent to 0.9 percent for Italy and from 2.6 to 2.4 percent. cent for Spain. The growth forecast for the French economy for next year remained unchanged at 1.6 percent.

It was noted that the UK economy, previously predicted to grow by 0.3 percent this year, is expected to contract by 0.6 percent in 2023. The UK economy growth forecast for 2024 increased from 0.6% to 0.9%.

With these revisions, the growth expectation for the group of developed countries increased from 1.1 percent to 1.2 percent for 2023, while it was reduced from 1.6 percent to 1.4 percent for 2024.

UPDATED CHINA GROWTH ESTIMATE

According to the report, which also includes growth forecasts for emerging markets and developing countries, China’s economic growth expectation for this year increased from 4.4 percent to 5.2 percent. The growth forecast for the Chinese economy for 2024 remained at 4.5 percent.

The growth expectation of the Indian economy for this year was 6.1 percent and the growth forecast for next year remained constant at 6.8 percent.

The Russian economy, previously estimated to contract 2.3 percent this year, is forecast to grow 0.3 percent in 2023. The Russian economy’s growth forecast for 2024 was also increased from 1.5 percent to 2.1 percent.

With these revisions, the growth expectation for emerging markets and developing countries increased from 3.7% to 4% for 2023, while it decreased from 4.3% to 4.2% for 2024.

TURKEY PREDICTIONS

In the IMF report, while the growth forecast for the Turkish economy for this year stands at 3 percent, the country’s economy is forecast to grow 3 percent in 2024.

The growth expectation of the Turkish economy for 2022 was determined at 5.5 percent.

In its report published in October last year, the IMF predicted that the Turkish economy would grow by 5 percent in 2022. (BRITISH AUTOMOBILE CLUB)