2023-07-25 15:00:02
Global growth is accelerating slowly, despite persistent inflation. In the update of its forecasts, published on Tuesday July 25, the International Monetary Fund (IMF) revised its growth forecast for 2023 slightly upwards to 3%, against 3.5% in 2022, whereas it was counting last April on 2.8%. A performance that remains well below the average of 3.8% per year, between 2000 and 2019.
Among the good news of recent months highlighted by the Washington-based institution: the announcement by the World Health Organization (WHO) in May that the Covid-19 pandemic was no longer a “global health emergency”the restoration of supply chains which allowed a return to normal of the prices of maritime freight, and the fears of a financial storm caused by the bankruptcies of the American banks Silicon Valley Bank and First Republic which have dissipated.
But the global economy must ride out the headwind of inflation. Excluding food and energy, inflation is slowing more slowly than expected in April, especially in rich countries where it has been revised upwards for 2023 and 2024. This so-called “core” inflation should not even slow down in 2023 in half of the countries of the world.
Fall in energy prices
Among the reasons given, the IMF cites “corporate profits which remain high”, of the “tensions in the labor market that are fueling higher wages” or the consequence of “exchange rate depreciation” in some countries. It is mainly thanks to the decline in energy prices that global inflation has decelerated, falling from 8.7% to 6.8% between 2022 and 2023. Prices fell after Europe filled its gas reserves last winter, and while China has experienced sluggish growth since the start of the year. Their impact was much greater on the fall in prices than the increases in key interest rates.
The IMF points out that “the priority in most economies is to pursue disinflation while ensuring financial stability”. In other words, central banks must continue to restore price stability while keeping an eye on the risks of a financial crisis. The threat still exists since, as the IMF points out, “financial sector turmoil could resume as markets adjust to continued monetary policy tightening by central banks”.
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