Status: 01/31/2023 09:14 a.m
The International Monetary Fund is more optimistic about global growth. The reason is also China’s departure from the strict zero-Covid policy. The economists are not assuming a recession in Germany.
The International Monetary Fund (IMF) has slightly raised its forecast for the global economy this year. According to the updated forecast, this is not least due to the developments in China. Last October, the IMF predicted growth of 2.7 percent for the global economy in 2023 – this forecast has now been raised to 2.9 percent.
Compared to the past two decades, global growth is still below the “historical average”. But China’s move away from the zero-Covid strategy could pave the way for a recovery in the global economy, the report said.
The IMF has revised its economic forecast for China significantly upwards: from 4.4 percent to 5.2 percent. The significantly improved economic prospects for the country are also shown by the purchasing managers’ index PMI published today, which is considered the mood barometer for the Chinese economy. Compared to the previous month, this rose significantly from 47 to 50.1 points, with values above 50 points indicating an expansion in economic activity. The global economy will cope with the consequences of the war in Ukraine and the persistently high inflation somewhat better than initially feared.
“Positive surprises” in many countries
Overall, there are “positive surprises” and an “unexpectedly high level of resilience” in numerous economies, according to the IMF. The experts do not expect the global economy to slip into recession this year – a scenario that the economists had not ruled out in the autumn. According to IMF chief economist Pierre-Olivier Gourinchas, the current forecast could even mark a “tipping point” with growth bottoming out while inflation eases.
For 2024, the IMF forecasts a slight acceleration in global growth to 3.1 percent, which is slightly below the October forecast. There are fears that the impact of the central banks’ sharp hikes in interest rates will dampen demand.
Europe “more resilient than expected”
According to the International Monetary Fund, Germany could avoid a recession this year, contrary to earlier forecasts. In addition to Germany, Italy will probably also be able to avoid a recession, the IMF said. In October, the financial institution had predicted that Germany and Italy would slide into recession in 2023.
The IMF said growth of 0.7 percent is now expected in the euro zone in 2023 – compared to 0.5 percent in the October forecast. Last year, the eurozone economy grew by 3.5 percent. According to the IMF, Europe has adjusted to higher energy costs faster than expected, and an easing in prices, especially for gas, has helped the region. Overall, Europe is proving to be “more resilient than expected” in view of the effects of the Ukraine war.
Bleak prospects for Britain
The UK is the only major advanced economy that the IMF has predicted will enter a recession this year. The IMF expects gross domestic product here to fall by 0.6 percent as households grapple with rising living costs, including energy and mortgages.