‘Turning point’: IMF raises 2023 world growth forecast to 2.9%, 1st in a year

Global growth is set to be higher than expected this year, the IMF said Monday, raising its forecast on surprisingly strong consumption and investment while China’s lifting of zero-Covid restrictions provides another boost.

The International Monetary Fund expects the world economy to expand 2.9 percent this year, slowing from 2022 to a rate that remains weak by historical standards, said its latest World Economic Outlook update.

“The year ahead will still be challenging… but it could well represent a turning point with growth bottoming out and inflation declining,” IMF chief economist Pierre-Olivier Gourinchas told reporters.

While China’s easing of coronavirus restrictions paves the way for a faster-than-expected recovery, the rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity, the Washington-based crisis lender said in its report.

But “adverse risks have moderated” since October’s forecast, the IMF added.

The fund now sees Germany and Italy avoiding recessions, as European growth proved “more resilient than expected” despite war in Ukraine.

But it warned that slower growth this year is driven by advanced economies.

US growth is seen falling to 1.4 percent in 2023 and euro area growth is to slump to 0.7 percent, while the United Kingdom economy contracts.