As recently as autumn, the IMF warned of the risk of a global recession. Global crises continue to weigh on the global economy. But China's new corona policy could pave the way for a recovery.
The global economy will cope with the consequences of the war in Ukraine and the continued high inflation somewhat better than initially feared. This is not least due to the developments in China, according to the updated forecast of the International Monetary Fund (IMF) on the global economy on Tuesday.
Growth will slow to 2.9 percent this year compared to 2022 (3.4 percent). But the prospects are “less bleak” than assumed in October, wrote IMF chief economist Pierre-Olivier Gourinchas. The reason for this are “positive surprises” and an “unexpectedly high level of resilience” in numerous economies, according to the report. A driver of the global economy could be China's departure from the zero-Covid strategy.
No more lockdowns – China has lifted its strict “zero Covid” policy. This helps the economy
There are some risks for economic development
The IMF does not expect the global economy to slide into recession this year – an option that the economists did not rule out in the autumn. According to Gourinchas, the current forecast could mark a “tipping point” with growth bottoming out while inflation eases. Should China make faster progress with the vaccination against the corona virus, this would ensure a recovery.
However, the report also lists a number of risks that would result in a worsening of the economic situation: a further worsening of the corona situation in China, an escalation of the Russian war of aggression in Ukraine and a debt crisis due to the strict monetary policy of the central banks.
India and China in particular are growing
In its updated forecast, the IMF still expects global growth of 2.9 percent this year. That's 0.2 percentage points more than assumed in October – but compared to the past two decades, growth is below the “historical average”. Growth of 3.1 percent is expected for 2024.
Half of the expected global growth is likely to be attributable to two large emerging countries, India and China alone. The USA and the euro zone would only account for a tenth of the total growth. According to the IMF, the economy in China will grow by 5.2 percent in 2023 and then by 4.5 percent in 2024. For India, 6.1 and then 6.8 percent are expected.
Around 1.4 billion people ensure economic growth in India
Russia will grow faster again< /h2>
It is also striking that the forecasts for Russia have improved significantly. After an economy that shrank by 2.2 percent in 2022, plus rates of 0.3 and then 2.1 percent are now expected. The USA, as the largest economy in the world, is expected to grow by 1.4 and 1.0 percent in 2023 and 2024.
For the euro zone, the IMF is forecasting growth of 0.7 percent this year – growth that is 0.2 percentage points higher than previously assumed. In Germany, gross domestic product (GDP) is only expected to grow by 0.1 percent in 2023 – but that is an increase of 0.4 percentage points in the estimate. In the coming year, the economy in Germany is then expected to grow by 1.4 percent – that's 0.1 percentage points less than previously expected.
The IMF experts made a gloomy forecast for Great Britain. As a result, the British economy will not grow this year, but will shrink by 0.6 percent. The country brings up the rear in the IMF analysis published on Tuesday.
Strict monetary policy pays off
According to the report, the fact that the global economy is now expected to grow faster than assumed in October is also due to the fact that Europe has coped better than expected with the shocks in the energy sector caused by the war in Ukraine. Despite severe headwinds, gross domestic product in the third quarter of 2022 was surprisingly strong in numerous economies – including the United States and the euro area.
Experts expect that consumer prices in Germany will rise much more slowly this year, also because energy is no longer quite as expensive.
According to the IMF, the rate hikes by the central banks also had an effect. “The fight against inflation is gradually paying off,” said IMF chief economist Pierre-Olivier Gourinchas. The central banks, which recently raised interest rates around the world unusually quickly, would have to continue their efforts. However, the headwind is less strong than in October. 2023 could bring the turning point. The outlook has not clouded over further. Around 84 percent of the countries will probably have lower consumer prices this year than last year. “That's good news, but not enough.” The full effect will probably not be felt before 2024, the forecast continued.
For 2023, the IMF expects an inflation rate of 6.6 percent worldwide, and in the coming year it should be 4.3 percent lie. Nevertheless, it will take a while before price stability returns with an inflation rate of two percent. In the vast majority of countries, the inflation rate in 2024 will still be above the level before the corona pandemic.
IMF chief economist Gourinchas emphasized that the sudden reopening of China in many countries paved the way for a rapid economic recovery. However, this could falter if the economy in China is slowed down again by severe corona waves. According to the IMF, growth there in 2022 was three percent. It was the first time in more than 40 years that China's growth was below the global average.
iw/hb (dpa, rtr, afp)