Slow economic growth is a challenge for all economies, and the risk of a falling global growth rate is not averted: IMF

Posted on 16th Feb 2023 by rohit kumar

In its latest World Economic Outlook report, the International Monetary Fund (IMF) has predicted that global inflation is set to decline this year. The IMF has warned that growth is slowing down, amid a crisis of survival in most economies. Reducing inflation remains a priority for all economies.

 

The IMF has said that amid the cost of living crisis in most economies, keeping prices low remains a priority. Economic activity in Ukraine is being stifled as central banks raise rates to fight war and inflation.

 

It is a matter of relief that the exemption from lockdown in China can help in global growth. Logistical challenges arising from the ongoing war and pandemic in Ukraine and other geopolitical issues have kept prices high, especially in energy commodities and general food items.

 

Why is economic growth falling?

Global economic growth is projected to slow from an estimated 3.4 percent in 2022 to 3.1 percent in 2024 before slowing to 2.9 percent in 2023. The picture has improved slightly since the last predictions. The current estimate for 2023 is 0.2 percentage points higher than predicted in the October 2022 World Economic Outlook. But cannot be happy with this. Growth between 2000 and 2019 remains below 3.8 percent.

 

What will be the growth rate in which country?

The IMF has released separate growth projections for some countries and regions. There was a projected increase of 2.0 percent in the United States in 2022. It is estimated to fall to 1.4 percent in 2023. Meanwhile, China's growth is expected to pick up from 3.0 percent in 2022 to 5.2 percent this year. However, it is expected to come down to 4.5 percent in 2023.

 

What will be the growth rate of India?

The report further states that India's growth rate this year is estimated to decline from 6.8 percent to 6.1 percent. However, it is expected to increase to 6.8 percent in 2024. Russia recorded an estimated negative growth of 2.2 percent in 2022. According to IMF estimates, the euro area had a combined growth of 3.5 percent in 2022. The United Kingdom's growth rate was projected to increase to 4.1 percent in 2022.

 

Will you get freedom from inflation?

According to the IMF, inflation reaches 8.8 percent in 2022. It is expected to fall to 6.6 percent in 2023 and a further decline to 4.3 percent is projected for 2024. Yet inflation forecasts remain higher than pre-pandemic levels. Inflation averaged around 3.5 percent between 2017 and 2019.

 

The reduction in prices in recent days reflects a fall in international fuel and non-fuel commodity prices due to weak global demand. Globally, inflation is expected to decline from 6.9 percent in Q4 2022 (y-o-y) to 4.5 percent by Q4 2023.

 

Which economies are at risk?

The IMF says the balance of risks is tilted to the downside. However, since the last World Economic Outlook in October 2022, the downside risks have eased. The situation of Corona in China is worrying now. The challenges of the Ukraine war are already intact. Tighter global funding costs could make the debt crisis worse, and financial markets could suddenly and unpredictably re-evaluate themselves in response to inflation. Greater geopolitical fragmentation could harm economic progress.

 

Also Read: Vishwa Hindi Sammelan: Languages suppressed during the colonial era are raising their voice on the global stage – S Jaishankar