The International Monetary Fund (IMF) slightly lowered its outlook for the global economy yesterday, saying that the global economy will grow by 2.8 per cent this year.
The IMF said in its latest World Economic Outlook report that banking system contagion risks were contained by strong policy actions after the failures of two US regional banks and the forced merger of Credit Suisse. But the turmoil added another layer of uncertainty on top of stubbornly high inflation and spillovers from Russian-Ukrainian war.
Both the 2023 and 2024 forecasts were marked down by 0.1 percentage point from estimates issued in January, partly due to weaker performances in some larger economies as well as expectations of further monetary tightening to battle persistent inflation.
The IMF’s US. outlook improved slightly, with growth in 2023 forecast at 1.6 percent versus 1.4 percent forecast in January as labor markets remain strong. But the Fund cut forecasts for some major economies including Germany, now forecast to contract 0.1% in 2023 and Japan, now forecast to grow 1.3% this year instead of 1.8% forecast in January.
The IMF raised its 2023 core inflation forecast to 5.1 percent, from a 4.5 percent prediction in January, saying it had yet to peak in many countries despite lower energy and food prices.
