Finance & Economics

IMF Lowers Forecast for Global Economic Growth After Banking Crises

The consequences of the coronavirus pandemic, which have not yet been fully overcome by the financial and industrial sectors, and the pressure factor in the form of banking crises have a negative impact on the prospects for economic growth.

IMF Lowers Forecast for Global Economic Growth After Banking Crises

Source: motionarray.com

The International Monetary Fund (IMF) on Tuesday, April 11, published a press release announcing a decrease in the baseline forecast of world production by 0.1% compared to estimates announced in January.

The IMF’s chief economist Pierre-Olivier Gurinchas says that the current state of the world economy cannot be characterized as unaffected by the global shocks of the last three years. He also noted that the crisis phenomena observed in the banking sector have aggravated the difficult situation and increased uncertainty in the economic sector at the global level.

The IMF now expects global economic growth to slow to 2.8% in 2023 from 3.4% a year earlier. In 2024, according to experts, this figure will grow to 3%. The IMF also predicts that growth in advanced economies will slow to 1.3% this year from 2.7% in 2022.

Pierre-Olivier Gurinchas emphasizes that this forecast is based on the assumption that the scale of the impact of negative factors on the global economy will remain within the current limits and the degree of their impact will not increase.

The IMF also reports continuing concerns about inflation and growing concerns about the likelihood of a recession.

Experts predict that the overall inflation in the world will decrease from 8.7% in 2022 to 7% this year. The decrease in this indicator is due to a reduction in the cost of commodities but is partially offset by prolonged core inflation.

Pierre-Olivier Gurinchas says that since the beginning of this year, there has been a tendency to reduce economic risks, but the banking turmoil in early spring could potentially provoke a tightening of global financial conditions.

The IMF suggests that central banks focus their efforts and capabilities on overcoming inflation. The institution also calls on regulators to clearly formulate goals to reduce the level of volatility risk and tighten fiscal policy. In developing countries, according to the IMF, measures should be taken to counteract the outflow of capital, which poses a threat to financial stability.

The fund’s press release says that the significant uncertainty of the current economic conditions and prospects for their further transformation leaves authorities with a narrow path to restoring price stability while avoiding recession and maintaining financial stability. The IMF notes that achieving strong and steady growth will require policymakers to be flexible and willing to adjust their decisions depending on the development of the situation.

As we have reported earlier, IMF Chief Warns Fragmentation Will Hurt Global Economy.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.