The International Monetary Fund (IMF) published the July 2023 issue of the World Economic Outlook Report with the title “Short-Term Resilience, Persistent Challenges”.
In the report, it was pointed out that the global recovery after the Kovid-19 outbreak and Russia’s invasion of Ukraine slowed down, noting that the forces that hindered last year’s growth continued.
It was noted in the report that the still high inflation continues to erode the purchasing power of households, and that the tightening of policy by central banks against inflation limited economic activity by increasing the cost of borrowing.
The report emphasized that output losses continue to be large, especially when compared to pre-pandemic forecasts for the world’s poorest countries.
In the report, which mentioned that despite the headwinds, global economic activity was resilient with the effect of the services sector in the first quarter of the year, it was reported that non-service sectors, including manufacturing, showed weakness and high-frequency indicators for the second quarter pointed to a broader slowdown in activity.
Warning that inflation may remain high in case of more shocks
In the report, it was noted that international trade and demand and production indicators in the manufacturing sector all point to more weakness, and it was noted that the excess savings accumulated during the epidemic decreased in advanced economies, especially in the USA, which means a thinner buffer to protect against shocks.
In the report, which pointed out that inflation may remain high in case of more shocks such as the escalation of the war in Ukraine and extreme weather events, it was underlined that the turbulence in the financial sector may start again as the markets adapt to further policy tightening by the central banks.
In the report, it was stated that the priority in most economies is to reduce inflation while maintaining financial stability, so central banks should focus on re-establishing price stability.
In the report, it was pointed out that the resolution of the debt limit dilemma in the USA and the strong steps taken by the authorities to contain the turbulence in the US and Swiss banking reduced financial sector risks.
2023 inflation expectation was reduced to 6.8 percent
In the IMF’s report, it was stated that the world economy, which was estimated to have grown by 3.5 percent last year, is expected to grow by 3 percent in 2023 and 2024.
In the forecasts released by the Fund in April, it was predicted that the world economy would grow by 2.8 percent in 2023 and 3 percent in 2024.
In the report, it was emphasized that although the growth forecast was higher than the previous report, it remained weak by historical standards, and that the increases in policy interest rates by the central banks as part of the fight against inflation continued to put pressure on economic activity.
In the report, it was stated that the global headline inflation is expected to decrease from 8.7 percent in 2022 to 6.8 percent in 2023 and to 5.2 percent in 2024.
In the IMF’s April report, the global inflation expectation was 7 percent for this year.
US growth forecast revised upwards for this year
In the report, it was stated that the US economy, which was estimated to have grown by 2.1 percent last year, is expected to grow by 1.8 percent this year and 1 percent in 2024.
In the IMF’s forecasts in April, it was predicted that the US economy would grow by 1.6 percent this year and 1.1 percent in 2024.
The growth rate of the Eurozone economy, which was estimated at 3.5 percent last year, is also expected to decline to 0.9 percent this year, and it was noted in the report that the region’s economy is expected to grow by 1.5 percent in 2024.
In the IMF’s forecasts in April, it was predicted that the Eurozone economy would grow by 0.8 percent this year and 1.4 percent next year.
In the report, it was stated that the German economy, which was predicted to shrink by 0.1 percent this year, is expected to shrink by 0.3 percent in 2023, while the growth forecast for the French economy was increased from 0.7 percent to 0.8 percent for this year.
It was noted in the report that the growth expectation for Italy was increased from 0.7 percent to 1.1 percent this year, and the growth forecast for Spain was increased from 1.5 percent to 2.5 percent.
In the report, it was noted that the growth forecasts for the next year were increased from 1.1 percent to 1.3 percent for Germany, from 0.8 percent to 0.9 percent for Italy, and remained constant at 1.3 percent for France and 2 percent for Spain.
In the report, it was reported that the UK economy, which was previously predicted to contract by 0.3 percent this year, is expected to grow by 0.4 percent, and the growth forecast for the country’s economy for 2024 was kept at 1 percent.
In the report, with the said revisions, the growth expectations for the developed countries group were increased from 1.3 percent to 1.5 percent for 2023, while they were maintained as 1.4 percent for 2024.
The growth forecast of the Chinese economy has not changed
In the report, which also includes the growth forecasts of emerging markets and developing countries, it is stated that China’s economic growth expectation for this year is 5.2 percent and its 2024 growth forecast is 4.5 percent.
In the report, it was noted that the growth expectation of the Indian economy was increased from 5.9 percent to 6.1 percent this year and left at 6.3 percent for next year, while the growth forecast for the Russian economy was increased from 0.7 percent to 1.5 percent for this year, while it remained unchanged at 1.3 percent for the next year.
In the report, it was stated that with these revisions, the growth expectation for emerging markets and developing country economies was increased from 3.9 percent to 4 percent for 2023, and decreased to 4.1 percent from 4.2 percent for 2024.
Turkey’s growth forecast raised for 2023
In the report, it was noted that the Turkish economy is expected to grow by 3 percent this year and 2.8 percent in 2024.
In the IMF’s forecasts in April, it was predicted that the Turkish economy would grow by 2.7 percent in 2023 and 3.6 percent in 2024.
