“IMF” – the International Monetary Fund says global economic growth will remain around 3.0% over the next five years – its weakest forecast for the medium term since 1990.  

Why does IMF see weaker growth ahead?

The institution expects factors that weighed on the global economy last year to persist moving forward. In its biannual report today, the fund said:

Tight monetary stances to allay inflation, limited fiscal buffers, high debt levels, commodity price spikes, Russia’s war, seem likely to continue into 2023 [and] are now overlaid by and interacting with new financial stability concerns.

In 2023, the IMF expects the U.S. economy to grow by 1.6% only, euro zone 0.8%, China 5.2%, and Russia 0.7%. The U.K. GDP, it forecasts, will contract by 0.3% this year.

S&P 500 is in the green on Tuesday despite the IMF World Economic Outlook.

IMF’s Forecast for global growth in 2023

According to the International Monetary Fund, global economic growth will come in at 2.8% in 2023 and 3.0% next year.

The new outlook for both years – which assumes that the recent banking crisis is contained – is 0.1% below its estimates published in January. The report reads:

Financial sector stress could amplify and contagion could take hold, weakening the real economy through a sharp deterioration in financing conditions and compelling central banks to reconsider their policy paths.

IMF sees global headline inflation dropping to 7.0% this year versus 8.7% in 2022 and take at least until 2025 to return all the way down to its target level. Core inflation, it warned, could take even longer to cool off.

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