The tone of "heading for the abyss" is moderated this time in the language of the International Monetary Fund (IMF). There is a light, even if it is dim.
“The outlook for the global economy has not worsened. Good news, but not enough. The return to a full recovery, with sustainable growth, stable prices and progress for all has only just begun,” said Pierre-Olivier Gourinchas, economic adviser and director of the IMF's research department.
According to the Fund in updating its forecasts, the global economy will grow at a rate of 2.9%, a slowdown compared to 3.4% in 2022, although this represents an increase of 0.2% compared to the forecast for October. And it will rebound in 2024, up to 3.11%, in this case one tenth less than in the previous one.
Spain remains in the highest part of growth in the euro zone, with a projection of 1.1% for this year (far from the 5.5% registered in 2022) and 2.4% in 2024. But its expansion goes back one tenth in 2023 and two in the next.
The euro zone remains at a forecast of 0.7% and 1.6%, respectively, while the United States will reach 1.4% and 1.0%.
"The fight against inflation is beginning to bear fruit, but the central banks must continue their efforts," stressed Gourinchas. The IMF stressed that rate hikes are paying off. “There are signs that monetary policy tightening is beginning to cool demand and inflation, although the full impact will likely not materialize before 2024,” he added in his report.
He maintained in his opinion that inflation seemed to peak in the third quarter of 2022, thanks mainly to the fact that the cost of fuel fell, especially in the US and in the countries of the European Union.
In 84% of countries, the price index is expected to be lower in 2023 than in 2022. In addition, world inflation is expected to decrease from 8.8% in 2022 (annual average) to 6.6% in 2023 and 4.3% in 2024. These levels are still much higher than before the pandemic (3.5%).
And the balance of risks remains tilted to the downside of the projections, even after the dangers have moderated since October and positive factors have gained traction since then.
The horizon emerges less gloomy. A stronger boost from repressed demand in many economies or a faster drop in inflation would play in their favour. The goal remains "sustained disinflation," which would lead to "a soft landing."
However, the strength of households, as well as a strong labor market and higher wages, which would help support private demand, could complicate the fight against inflation. And this factor, his perseverance, is one of the dark clouds, together with the fact that China is hit again by the covid, that the war in Ukraine or the volatility of the financial markets worsen.
The IMF rules: "With more restrictive monetary conditions and a slower growth rate that could affect financial and debt stability, it is necessary to resort to macroprudential tools and strengthen debt restructuring."
