2023-10-10 08:00:00
The International Monetary Fund (IMF) lowers its global economic growth forecast for 2024, but raises its inflation outlook and will maintain tight policy until central banks can sustainably ease price pressures. I urged him to do so.
In its World Economic Outlook released on the 10th, the IMF predicts that the global consumer price inflation rate will be 5.8% next year. The government urged caution against inflation, an upward revision from the 5.2% forecast three months ago. It expects inflation rates in most IMF member countries to remain above central bank targets through 2025.
Inflation Won’t Slow as Much as Previously Anticipated
Source: International Monetary Fund
The IMF and World Bank are holding their annual meeting in Marrakech, Morocco, the first meeting in Africa in 50 years. More than 1,000 people were killed in a large-scale attack on Israel by the Islamic group Hamas, which effectively controls the Palestinian autonomous region of Gaza. It is casting a dark shadow over the IMF and World Bank general meetings, and is heightening tensions in the Middle East, which accounts for nearly one-third of the world’s oil supply, and uncertainty in the global economy.
The global inflation rate reached 8.7% in 2022, the highest level since the mid-1990s, and major central banks, including the US Federal Reserve and the European Central Bank (ECB), have been aggressively raising interest rates for more than a year. Ta.
“Monetary policy will need to remain tight in most regions until inflation continues to fall firmly towards target,” IMF chief economist Pierre-Olivier Grandchat told a news conference.
Factors such as supply chain disruptions caused by the coronavirus pandemic and fiscal stimulus measures implemented after lockdowns to combat the pandemic have spurred the price hike. The increase in demand after the pandemic, the tightening of the US labor market, and the disruption of food and energy supplies mainly in Europe and the UK due to Russia’s invasion of Ukraine have all coincided.
Inflation Forecast for 2024
Source: International Monetary Fund
The IMF has cut its forecast for next year’s global economic growth rate to 2.9%, down 0.1 percentage point from its July forecast. This is lower than the pre-pandemic 20-year average (3.8%). The growth rate forecast for 2023 remains unchanged at 3%.
Despite the weak growth outlook, the global economy remains relatively stable, and the IMF believes there are increasing chances that central banks will be able to tame inflation without triggering a global recession.
IMF Tweaks Global Growth Forecast for 2024
Source: International Monetary Fund
For the United States, the world’s largest economy, the IMF has revised its growth rate for this year to 2.1%, upward from its July forecast (1.8%). Next year, the rate will be 1.5%, up from 1%. This is due to stronger momentum in capital investment in the second quarter of this year (April-June) and strong consumption growth.
It is assumed that the unemployment rate in the United States will reach a peak of 4% by October-December 2024 (fourth quarter). As of April this year, it was expected to be 5.2%. The US economy is expected to experience a softer “landing” than previously expected.
GDP Forecast
Source: International Monetary Fund
In contrast, the growth forecast for China, the world’s second-largest economy after the United States, has been revised downward. The rate was lowered from 5.2% to 5% in 2023, and from 4.5% to 4.2% in 2024. China’s economy is slowing down due to a decline in real estate investment and falling housing prices, which threatens revenue from the sale of land use rights, as well as weak consumer sentiment.
The outlook for the euro area’s growth rate has also been lowered to 0.7% this year (previously 0.9%) and 1.2% next year (previously 1.5%).
Japanese economy
The IMF forecasts Japan’s economic growth rate in 2023 to be 2%. Previously, it was expected to be 1.4%. The upward revision is said to be due to a recovery in automobile exports, which had been sluggish due to increased demand, strong tourism, accommodative policies, and supply chain disruptions.
The UK economy is expected to grow by just 0.6% next year. Previously, it was set at 1%. He cited the tightening of monetary policy to curb the inflation rate, which remains at a high level, as a factor.
This year’s trade growth forecast has been revised downward to 0.9%. As of July, it was expected to grow by 2%. The 20-year average before the pandemic was 4.9%. This reflects the trend toward emphasizing domestic services, the delayed effect of the strong dollar, and the spread of trade barriers.
Original title:IMF Warns of Inflation’s Tenacity, Weaker Global Growth in 2024(excerpt)
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