The International Monetary Fund (IMF), has revised its growth forecast for the global economy in 2023, raising it to 3 percent. This is an increase from the previous projection of 2.8 percent made in April.
The updated growth forecast is part of the IMF’s latest world economic outlook titled ‘Near-Term Resilience, Persistent Challenges’ published in July 2023.
The IMF said though the forecast for 2023 was modestly higher than predicted in the April 2023 WEO, it remained weak by historical standards.
“Compared with projections in the April 2023 WEO, growth has been upgraded by 0.2 percentage points for 2023, with no change for 2024,” the report reads.
“The forecast for 2023–24 remains well below the historical (2000–19) annual average of 3.8 percent.
“It is also below the historical average across broad income groups, in overall Gross Domestic Product (GDP), as well as per capita GDP terms.”
According to the International Monetary Fund (IMF), the decline in global economic growth from 2022 to 2023 was primarily driven by advanced economies.
“For advanced economies, the growth slowdown projected for 2023 remained significant, from 2.7 per cent in 2022 to 1.5 per cent in 2023,” the report reads.
“About 93 per cent of advanced economies are projected to have lower growth in 2023, and growth in 2024 among this group of economies is projected to remain at 1.4 per cent.”
The institution said in emerging markets and developing economies, the growth outlook was broadly stable for 2023 and 2024, although with notable shifts across regions.
“For emerging market and developing economies, growth is projected to be broadly stable at 4.0 per cent in 2023 and 4.1 per cent in 2024, with modest revisions of 0.1 percentage point for 2023 and –0.1 percentage point for 2024,” the report reads.
“Underlying (core), inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward,” it said.
“China’s recovery could slow, in part as a result of unresolved real estate problems, with negative cross-border spillovers,” the report reads.
“Sovereign debt distress could spread to a wider group of economies.”
The IMF, however, said on the upside, inflation could fall faster than expected, reducing the need for tight monetary policy, and domestic demand could again prove more resilient.
The institution said in most economies, the priority remains achieving sustained disinflation while ensuring financial stability.
“Therefore, central banks should remain focused on restoring price stability and strengthening financial supervision and risk monitoring,” the IMF said.
“Should market strains materialise, countries should provide liquidity promptly while mitigating the possibility of moral hazard.
“They should also build fiscal buffers, with the composition of fiscal adjustment ensuring targeted support for the most vulnerable.
The international financial institution said improvements to the supply side of the economy would facilitate fiscal consolidation and a smoother decline of inflation toward target levels.
The International Monetary Fund (IMF), also projected that Nigeria’s economic growth will gradually decline in 2023 and 2024, which aligns with the April World Economic Outlook (WEO), projections. The primary reason for this decline is attributed to security issues in the oil sector, which have significant implications for the country’s overall economic performance.
As for sub-Saharan Africa as a whole, the IMF’s report indicates that economic growth is expected to decrease to 3.5 percent in 2023. However, the region is anticipated to experience a rebound and pick up to 4.1 percent growth in 2024, signifying some degree of recovery and improvement in economic conditions.
The institution said inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events, triggering more restrictive monetary policy warning that financial sector turbulence could resume as markets adjust to further policy tightening by central banks.
