2023-07-25 17:48:01
WASHINGTON (AP) — Global economic growth will be slightly better than previously projected by the International Monetary Fund, but “many challenges remain and it’s too early to celebrate,” the organization’s chief economist said Tuesday.
Pierre-Olivier Gourinchas, an IMF economist, offered his assessment as the institution forecasts global economic growth to slow to an estimated 3% in 2023 and 2024, down from 3.5% in 2022.
But the most recent projections represent an increase of 0.2% compared to those published in April, when the IMF forecast that the world economy would grow less than 3% this year, increasing the global risk of hunger and poverty.
Despite the slight improvement, global economic growth “remains weak by historical standards,” says the IMF report. But Gourinchas said in a blog post on Tuesday that “in the short term, the signs of progress are undeniable.”
The IMF also predicted that world inflation will drop from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024.
The organization said that when the United States was able to avoid a default by resolving the debt limit impasse, it “moderated adverse risks to the economic outlook.”
However, he added that the inflationary threat due to Russia’s invasion of Ukraine and the potential for extreme weather events might prompt central banks to raise interest rates or force world leaders to tighten economic measures.
On top of that, China’s slow economic recovery as it reopened its economy following the pandemic “is showing signs of losing momentum,” the IMF said.
The US economy has been surprisingly resilient despite interest rate hikes. Employers are adding an average of 278,000 jobs a month so far this year and unemployment is at 3.6%, not far from a half-century low.
The Federal Reserve chairman and other officials will meet this week to decide on interest rates, hoping to achieve a “soft landing” in which inflation can be tamed without causing a recession.
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Paul Wiseman contributed to this story.
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