[Politics] IMF again lowers its forecast for world economic growth for 2023

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The global economy is a little closer to recession, in which several developed countries will fall in 2023, the International Monetary Fund warned on Tuesday, worried about inflation and the impact of the war in Ukraine.

The IMF maintained the growth forecast for 2022 at 3.2%, a percentage that has already changed three times this year, but lowered its expectations for 2023 for the fourth time, now 2.7% (0.2 percentage points less than forecast in July).

(Also read: Global recession: IMF warns that the risk is increasing)

This is the "weakest growth since 2001, with the exception of the global financial crisis and the acute phase of the covid-19 pandemic, and reflects a significant slowdown in the largest economies", the United States, Europe and China, for different reasons, specifies the institution.

Because the global economy, which was slowly recovering from the effects of the pandemic and facing logistical problems in many sectors, has to deal with chain shocks.

"This year's shocks will reopen economic wounds that were only partially healed after the pandemic," IMF Chief Economist Pierre-Olivier Gourinchas said in a blog accompanying the outlook.

More than a third of the world economy is headed for a contraction next year, and the top three economies -- the United States, the European Union and China -- will remain stagnant, he warned.

(Also: OECD lowers its forecast for world economic growth for the year 2023)

"The worst is yet to come and many people will perceive 2023 as a recession," Gourinchas said.

The main difficulty is inflation, which affects developed economies, but even more so in emerging and developing countries, where it will reach an average of 8.8% at the end of the year (+0.5 pp compared to forecasts for July).

The slowdown affects the richest countries, starting with the United States, which will only grow 1.6% in 2022, compared to the 2.3% forecast in July. And 2023 could be even more difficult with 1%.

The situation is not better in the euro zone despite the fact that growth will be 3.1% in 2022, better than expected in July (+0.5 pp). And it is that in 2023 it will border on recession, with growth of 0.5% (-0.7 pp compared to July forecasts).

And for some Member States, such as Germany and Italy, recession seems inevitable (-0.3% and -0.2% respectively), while France narrowly escapes, with growth of 0.7%, as does the UK, outside the EU, with 0.3%. Better luck is Spain, which will grow 1.2%.

Emerging countries
For China, the world's second largest economy, 2022 will be its worst year in more than four decades with the exception of the onslaught of the pandemic in 2020, with a forecast growth of only 3.2%, which will rise in 2023 to 4.4%.

It is due to the continuous lockdowns caused by the zero tolerance policy against covid-19 in several cities, including the economic hub, Shanghai.

Despite this gloomy global context, some regions are improving.

This is the case of Russia, whose economy bears the weight of the sanctions imposed on it by the United States and the European Union, for having invaded Ukraine, this year it will experience a contraction of 3.4% (better than expected).

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Russia will, however, be the only economy in the G20, which meets in Washington on Wednesday, to suffer a recession this year.

Forecasts for Latin America and the Caribbean also improve, with growth of 3.5% (+0.5 pp) due to stronger-than-expected activity in the first half, although they drop for 2023 to 1.7% a as "growth weakens in partner countries, financial conditions tighten and commodity prices moderate".

Brazil and Mexico, the first and second regional economies respectively, grow less than the regional average, but do well compared to other emerging nations.

For Brazil, in the midst of the campaign for the presidential ballot on October 30, the IMF predicts growth of 2.8% for 2022 (+1.1 pp compared to the July forecast) and 1% in 2023 (-0. 1pp).

The projection for Mexico, meanwhile, is 2.1% this year (-0.3 pp) and 1.2% next year (unchanged).

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At a global level, the future remains uncertain and the forecasts, especially for 2023, are only valid if "long-term inflation expectations remain stable" and the tightening of monetary policies "does not lead to a generalized recession and adjustments disorderliness in the global financial markets".

The effect of 2022 will be felt in the long run, as IMF Managing Director Kristalina Georgieva said on Thursday: "By 2026, this will represent a $4 trillion loss for the global economy."

The only positive thing about a report that oozes concern is the forecast that inflation will fall from the end of this year until reaching a level comparable to that of 2021 (4.7%) in the last quarter of 2023.

https://www.eltiempo.com/mundo/mas-regiones/fmi-rebaja-su-prevision-de-crecimiento-economico-mundial-para-2023-708912