The International Monetary Fund (IMF) made on Tuesday, April 11 known that it is afraid of a difficult continuation of the year 2023 for the global economy. The higher interest rates of central banks are having an impact on the economy and new problems within the financial system – such as the banking crisis – could push the global economy towards a recession, according to the IMF.
New layer of uncertainty
In its latest World Economic Outlook report, the IMF writes that a major crisis in the global banking system has been prevented by adequate action by the authorities. Despite that, two major American banks have collapsed and Credit Suisse had to be taken over to prevent worse.
According to the IMF, this creates a new layer of uncertainty for the global economy on top of the still high inflation. It also briefly mentions the war between Russia and Ukraine that still has an impact on the world economy, in particular due to the geopolitical tensions that have arisen as a result.
We also now have the decision of the OPEC+ countries to significantly reduce oil production for the further course of 2023. In the context of the still high inflation, this is not a welcome development for the Western world.
“With the recent increase in financial market volatility, the fog surrounding the global economy has only grown thicker. Uncertainty is high and the risk balance does not look good at the moment,” the IMF writes in its statement.
Still growing
Despite the difficult situation, the IMF forecasts growth in global gross domestic product (GDP) of 2.8 percent for 2023. That would mean a considerable drop compared to the growth of 3.4 percent in 2022, but with those numbers there is still no drama.
Still, it has dropped its forecast for 2023 by 0.1 percent as a result of developments in recent months. In particular, the high inflation and the higher interest rates that central banks have to charge as a result appear to be important reasons for this.
The chief economist of the IMF, Pierre-Olivier Gourinchas, is still in favor of higher interest rates to bring inflation under control despite concerns about the global economy. “Our advice is to focus monetary policy on reducing inflation,” said Gourinchas.
For Bitcoin, this may mean that the second half of 2023 in particular will prove to be a difficult test. That will be the moment – if a recession breaks out – when the market has to decide whether to put Bitcoin in the same basket as risk stocks or whether they see the digital currency as a safe haven in times of economic disaster.