IMF raises global growth forecast for 2023 to 2.9%

The world economy will grow 2.9% this year, the International Monetary Fund (IMF) anticipated this Monday, which improved its forecasts due to the lifting of the zero Covid policy in China and the removal of the specter of a recession in the euro zone.

Year "it will remain challenging (…) but could well represent a turning point"affirmed the chief economist of the IMF, Pierre-Olivier Gourinchas, when updating the economic outlook of the organization, which forecasts that China will grow 5.2% (+0.8 percentage points) and Germany and Italy avoid recession (0.1% and 0.6% growth of GDP this year respectively).

Thanks to the reopening of China

The world economy will grow more than expected this year, the IMF predicted on Monday, upgrading its forecast on surprisingly strong consumption and investment and a boost from lifting China’s zero-Covid restrictions.

The International Monetary Fund expects the world economy to expand 2.9% this year, a rate that remains low, according to its World Economic Outlook update released Monday.

Year "it will remain challenging (…) but could well represent a turning point"IMF chief economist Pierre-Olivier Gourinchas told reporters.

China paves the way to recovery by easing Covid-19 restrictions, but rising central bank rates to combat inflation and Russia’s war in Ukraine continue to weigh on economic activity, says the Washington-based organization in its report.

"Adverse risks have moderated" since the October forecast, the IMF added.

The Fund now expects Germany and Italy to avoid recession as European growth proved to be "stronger than expected" despite the war.

Latin America will grow 1.8%

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The economy of Latin America and the Caribbean will grow 1.8% this year, 0.1 percentage points more than anticipated in October, in a context marked by inflation and the consequences of the war in Ukraine, the IMF forecast on Monday.

In its economic outlook update, the International Monetary Fund forecasts that Brazil’s economy will expand 1.2% (+0.2 percentage points) and Mexico’s 1.7% (+0.5 percentage points improvement).

The economy of Latin America and the Caribbean will grow 1.8% this year, 0.1 percentage points more than anticipated in October, in a context marked by inflation and the consequences of the war in Ukraine, the IMF anticipated on Monday.

In updating its economic outlook, the International Monetary Fund also forecasts that Brazil’s economy will expand 1.2% (+0.2 percentage points) and Mexico’s 1.7% (+0.5 percentage points over the previous forecast).

The two largest Latin American economies will grow more than anticipated three months ago due to "the unexpected resilience of domestic demand and higher-than-expected growth in its main trading partners", says the IMF in its report. In the case of Brazil, the "tax support" from the state to the economy.

Projected growth in the region for 2023 is well below the 3.9% in 2022, due to the impact of the Russian invasion of Ukraine, recessions, and efforts to control skyrocketing inflation.

For 2024, the Fund forecasts 2.1% growth in the region (-0.3 percentage points over what was forecast in October), due to "tighter financial conditions, lower prices for export commodities, and downward revisions to trading partner growth".

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