The IMF has revised its outlook for the world economy for 2023 and believes that the worst is yet to come for the economy, which is slowing due to high prices, the repercussions of Russia's war in Ukraine, and the pandemic's lasting effects.
The Fund projects that global growth would drop to 2.7 percent in 2023 from its current forecasted level of 3.2 percent in 2022, with a 25% chance that it will slip below 2 percent. In 2023, more than one-third of the world's economy will shrink, while the three biggest economies—the US, the Euro area, and China—will continue to stagnate.
Persistent and broadening inflation pressures have triggered a rapid and synchronized tightening of monetary conditions, alongside a powerful appreciation of the US dollar against most other currencies," said the Fund in its statement.
“The global economy is weakening further and facing a historically fragile environment. The outlook continues to be shaped by three forces. Persistent and broadening inflation, causing a cost-of-living crisis, the Russian invasion of Ukraine and the associated energy crisis, and the economic slowdown in China," said Pierre-Olivier Gourinchas, the IMF’s Chief Economist on Tuesday, October 11 in Washington, DC.
The Chief Economishe biggest fight now is the fight against inflation. Central banks are laser focused and they need to keep a steady hand. Growth will slow in 2023 as conditions tighten and some financial fragilities may emerge. But the main priority should be to restore price stability. This is the bedrock of future economic prosperity.