IMF issues surprise report on global economy

The International Monetary Fund (IMF) forecast slowing global economic growth from 3.4% last year to 2.8% this year. After that, the economic growth rate is expected to rise to 3% next year 2024.

In a new IMF report, the risk outlook was found to be sharply tilted towards the downside, with an increased likelihood of a sharp decline. In a reasonable scenario with more pressure on the financial sector, global economic growth will slow to around 2.5% in 2023.

Looking ahead, economic growth is expected to remain at about 3% over the next five years. This underlying forecast of 3% over the next five years to 2028 makes it the lowest medium-term growth forecast since 1990, and well below the average of 3.8% over the past two decades.

The poor outlook reflects the strict political stance needed to reduce inflation, the consequences of the recent deterioration of the financial situation, Russia’s war in Ukraine and the growing geopolitical fragmentation of the economy.

A few days ago, the International Monetary Fund slightly downgraded its 2023 growth forecast by reducing the pace of rate hikes, but warned that serious disruptions in the financial system would lead to stagnant production.