Global economic growth falls to 3%- IMF

The International Monetary Fund (IMF) has said the global economic growth is projected to fall from 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024 on an annual average basis.
The IMF said compared with projections in the April 2023 World Economic Outlook (WEO), growth has been upgraded by 0.2 percentage point for 2023, with no change for 2024.
The IMF provides WEO updates twice a year (in both January and July) to guide economic policies and provide directions the global economy should take. 
 
Through an online news conference on the release of WEO from the IMF headquarters in Washing, DC, Prof Pierre-Olivier Gourinchas, the Economic Counsellor (chief economist) and the Director of Research of the IMF said on July 25 that the forecast for 2023–24 remains well below the historical (2000–19) annual average of 3.8 percent. It is also below the historical average across broad income groups, in overall GDP as well as per capita GDP terms.

“While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO), it remains weak by historical standards,” he said.
Professor Gourinchas said forces shaping the outlook is that the global recovery from the Covid-19 pandemic and Russia’s invasion of Ukraine is slowing amid widening divergences among economic sectors and regions.
He said the World Health Organization (WHO) announced in May that it no longer considers Covid-19 to be a “global health emergency.”

“Supply chains have largely recovered, and shipping costs and suppliers’ delivery times are back to pre-pandemic levels but forces that hindered growth in 2022 persist. Inflation remains high and continues to erode household purchasing power,” he said.
Professor Gourinchas further stated that advanced economies continue to drive the decline in growth from 2022 to 2023, with weaker manufacturing, as well as idiosyncratic factors, offsetting stronger services activity.
For advanced economies, the growth slowdown projected for 2023 remains significant; from 2.7 percent in 2022 to 1.5 percent in 2023, with a 0.2 percentage point upward revision from the April 2023 WEO.

In the United States, growth is projected to slow from 2.1 percent in 2022 to 1.8 percent in 2023, then slows further to 1.0 percent in 2024. For 2023, the forecast has been revised upward by 0.2 percentage point, on account of resilient consumption growth in the first quarter, a reflection of a still-tight labor market that has supported gains in real income and a rebound in vehicle purchases.
Growth in the euro area is projected to fall from 3.5 percent in 2022 to 0.9 percent in 2023, before rising to 1.5 percent in 2024. The forecast is broadly unchanged, but with a change in composition for 2023.

Growth in the United Kingdom is projected to decline from 4.1 percent in 2022 to 0.4 percent in 2023, then to rise to 1.0 percent in 2024.
Growth in Japan is projected to rise from 1.1 percent in 2022 to 1.4 percent in 2023, reflecting a modest upward revision, buoyed by pent-up demand and accommodative policies, then slow to 1.0 percent in 2024, as the effects of past stimuli dissipate.

For emerging market and developing economies, growth is projected to be broadly stable at 4.0 percent in 2023 and 4.1 percent 2024, with modest revisions of 0.1 percentage point for 2023 and –0.1 percentage point for 2024.
He said in sub-Saharan Africa, growth is projected to decline to 3.5 percent in 2023 before picking up to 4.1 percent in 2024.
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