The International Monetary Fund published its latest World Economic Outlook on Tuesday, correcting its January projection down by a sliver. Three months ago, the IMF had first painted a slightly less gloomy picture of the global economy in its quarterly outlook as inflation appeared to have peaked in 2022, consumer spending remained robust and the energy crisis following Russia’s invasion of Ukraine had been less severe than initially feared. Now, the new report is raising fears that even this less-than-terrible outlook won't hold.
Global growth is now expected to fall from 3.4 percent in 2022 to 2.8 percent this year before rebounding to 3.0 percent in 2024. The 2023 growth projection is down from a January estimate of 2.9 percent. One of the reasons behind the correction is inflation that is cooling slower than expected. The IMF now predicts global inflation to still reach 7.0 percent in 2023, down from 8.7 percent in 2022, and not return to its target until 2025. The IMF said that in the case of further stress in the financial sector - for example more bank failures - the outlook might have to be revised downwards again.
"The global economy is yet again at a highly uncertain moment, with the cumulative effects of the past three years of adverse shocks - most notably, the COVID-19 pandemic and Russia’s invasion of Ukraine - manifesting in unforeseen ways", the report states in line with its refocuing on uncertainty in the global economy. High levels of public debt were mentioned by the institution as another factor making recovery more difficult.