The global economy is showing signs of a slight improvement, with slightly better growth forecast in 2023 and steady growth in 2024, according to the latest update on economic growth released on Tuesday by the International Monetary Fund (IMF), AFP reported.

The agency now expects global growth to reach 3% in 2023, up from 2.8% in its previous estimate in April, and to remain flat in 2024, unchanged from its previous estimate.

“Our forecast remains slightly lower than last year’s 3.5%, but revised down by 0.2 percentage points to 3% for overall growth. The slowdown is mostly concentrated in advanced economies, while growth in emerging markets remains at 4%. But this hides significant differences between countries,” said the chief economist of the IMF, Pierre-Olivier Gurincha, at the press conference.

Most advanced economies, as well as major developing countries, appear to be doing better than the Fund had feared, despite tight monetary policy almost everywhere to combat inflation, which remains “stubbornly high”.

Inflation continues to cause problems

And on that front, the IMF expects little improvement by the end of the year, with global inflation expected to reach 6.8% by the end of the year, down 0.2 percentage points from its April forecast.

But inflation is also expected to last longer: it is still expected to be 5.2% at the end of 2024, while in March the institution expected a decline of 0.3 percentage points.

“The slowdown we are seeing is largely due to lower prices in China, especially in the industry in the second quarter,” Gurinchas told AFP.

The IMF insists on the need for continued tightening of monetary policy to bring inflation back to the target level, even if it means that it has to affect an economy that has so far been much more resilient than expected, especially in developing countries.

The United States is avoiding recession, Germany is not

In the G7, Germany is likely to be the only country to experience recession in 2023. The IMF now forecasts a contraction of 0.3%, down from just 0.1% in April.

In contrast, other major European economies are holding up better, with France forecast to rise to 0.8% (+0.1 point from April) and Italy to 1.1% (+0.4 point), while Spain’s economy even seems to be showing real signs of health (expected 2.5%, +1 point). Growth of 0.9% (+0.1 point) is expected for the entire eurozone.

As for the United States, the long-awaited risk of a recession now appears to have been averted, despite successive interest rate hikes since March 2022: the IMF now expects the US economy to grow by 1.8%, up from 1.6% last April.

The US economy was particularly strong in the first quarter, registering an annual growth rate of 2%, and growth for the current year is estimated at 0.9%, according to the OECD.

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