The IMF’s global economic outlook is improving amid signs of slowing inflation

The world’s central banks could be winning the battle against inflation, the International Monetary Fund has hinted as it slightly upgraded its outlook for the global economy, in part due to a sharp fall in global oil prices

In its update on the global economic outlook published today, the fund revised its forecasts for 2023 upwards. He expects the global economy to grow 2.9 percent this year, a 0.2 percentage point improvement from what he had predicted in October.

The upgrade is mainly due to stronger than expected growth in the United States and the Eurozone. However, the UK economy is expected to contract by 0.6 percent, down 0.9 percentage points from October. There is no separate forecast for Australia.

Despite the surge, global growth would come in at 2.9 percent, below 2022’s 3.1 percent and less than half of 2021’s 6.2 percent.

The fund’s research director, Pierre-Olivier Gourinchas, said there were still lingering risks to the economy, led by efforts to quell inflation, the war in Ukraine and the way China emerged from its COVID lockdowns be.

“Despite these headwinds, the outlook is less gloomy than our October forecast and could mark a turning point as growth bottoms out and inflation eases,” he said.

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“Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, resilient household consumption and business investment, and a better-than-expected adjustment to Europe’s energy crisis.

“Inflation also showed improvement, with headlines now declining in most countries – although core inflation, which excludes more volatile energy and food prices, has not yet peaked in many countries.”