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IMF lowers global growth to 3.2% this year and 2.9% in 2023

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The International Monetary Fund (IMF) has lowered its forecasts global growth up to 3.2% this year and 2.9% next year, in a scenario of high instability in which it is not ruled out that these estimates will worsen again.

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The IMF thus reduces by four and seven tenths, respectively, the forecast it published in the spring, and revises downwards the evolution of the main engines of the world economy – the United States, China and the euro zone – and of practically all the large planet economies.

The United States, the world’s largest economy, is undergoing a major revision in the IMF’s forecasts, which this organization already advanced a few days ago: 2.3% growth for this year and only 1% next year, 1.4 and 1.3 points less than in their previous estimates, respectively.

Somewhat better off is its great world competitor, China, which will grow, according to these new IMF calculations, 3.3% this year (1.1 points less than the forecasts for April) and 4.6% next year (half a point less).

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The IMF assures that the risks it warned of in its April report have already materialized and are affecting the world economy: rising inflation, a longer and more pronounced slowdown than expected in the Chinese economy and the negative effects of the Ukrainian war.

But, in addition, the IMF makes calculations with another much more adverse scenario in which it imagines what can happen if prices do not moderate, there is a sudden stoppage of Russian gas supplies to Europe, the tightening of financial conditions that suffocates developing economies or geopolitics impedes the normal development of world trade.

In that case, and if these risks materialize, the IMF calculates an even lower global growth, of 2.6% this year and only 2% in 2023, a figure that has only been recorded five times since 1970, always during the main crises -1973, 1981 and 1982, 2008 and 2020-.

In this report, the IMF insists on asking governments to make reducing inflation their “first priority”.

And although he admits that a restrictive monetary policy will inevitably bring economic costs, he stresses that delaying it would only “exacerbate” those costs.

As for Europe, the new revised IMF forecasts show that the big economies are suffering more than expected due to the collateral effects of the Russian invasion of Ukraine.

For this reason, the Fund reduces its forecasts for the euro zone by two tenths in 2022, to 2.6% and by 1.1 points for 2023, the year in which it now predicts growth of only 1.2% for the countries of the currency. only.

Of the main economies in the euro zone, Spain continues to be the one that grows the most, although the Fund’s expectations are also diminished, which now calculates an increase in the Gross Domestic Product (GDP) of 4% for this year (eight tenths less) and 2% the one that comes (1.3 points below).

The forecasts for the main European economy, Germany, will also grow only 1.2% this year (nine tenths below the previous forecast) and 0.8% in 2023 (1.9 points less).

Latin America is one of the few regions that sees the Fund’s forecast for this year improve, which now stands at 3%, half a point more, although that for 2023 worsens, the year in which an advance of 2% is calculated, half a point less .

In Brazil, the economy will grow 1.7% this year, nine tenths more, and 1.1% next year, three tenths less, while Mexico’s growth will be 2.4% this year (four tenths more) and 1.2% next (1.3 points less).

Regarding inflation, the IMF is also pessimistic and revises its forecasts, in this case upwards: that of the group of advanced economies will be at 6.3% this year (compared to the 4.8% projected in April) and that of the euro zone calculates a inflation of 7.3%, 2.9 points above its previous estimate.

Source: Gestion

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