For this year, the IMF is still counting on global inflation of 7 percent, 0.4 percentage points higher than its previous January estimate. Next year, prices worldwide would then rise another 4.9%, where as in January 2024 inflation was assumed to be 4.3%.
Netherlands
The situation is slightly different in the Netherlands. In this case, the IMF previously thought that the overall price level was likely to rise further by 4.2% in 2023. This has been revised slightly to 3.9%. But on the other hand, the IMF now says that inflation here will probably still rise to 4.2% next year. It is possible that the government’s cap on energy prices and the reduction in the excise duty on petrol will no longer apply.
“While global inflation has declined, it mainly reflects the sharp reversal in energy and food prices,” said IMF chief economist Pierre-Olivier Gourinchas. Partly due to the mild winter, energy prices are no longer as high as they were just after the war broke out in Ukraine. But many other products and services are still rapidly becoming more expensive.
Basic inflation
According to Gourinchas, core inflation, or inflation adjusted for the volatility of energy and food prices, has probably not yet peaked in many countries. He also points out that wages across the board are still rising less rapidly than prices, meaning people’s purchasing power is actually deteriorating.
When it comes to the bigger economic picture, Gourinchas touches on both positive and negative developments. For example, China’s economy has clearly rebounded since the country ended its strict coronavirus policy. However, due to high inflation and sharply rising interest rates, growth in many countries appears to remain very limited for a long time to come.
world economy
The IMF has cut the outlook for the global economy by 0.1 percentage point for both this year and next year since its last forecast. Global growth is now expected to fall to 2.8% this year before increasing slightly to 3% next year. The latest estimate for the Netherlands dates back to the end of last year and assumed growth of 0.6% in 2023. The IMF has now increased that forecast to 1%. But the IMF hardly expects a recovery for 2024, because then the fund expects a plus of 1.2 percent.