SHAFAQNA TURKEY- The IMF has updated its World Economic Outlook report under the heading “Inflation Peaks in Low Growth Environment”. The report pointed out that raising interest rates by central banks to fight inflation and the war unleashed by Russia in Ukraine continue to dampen economic activity.
The report said the rapid spread of Covid-19 in China slowed growth in 2022, but the recent normalization has paved the way for a faster-than-expected recovery.
Risks remain negative but have diminished
The report noted that the risk balance is still at a loss, but downside risks have diminished since the report was published in October last year.
The report, which emphasized that sustainably lowering inflation during a cost-of-living crisis is a priority in most countries, found that while tighter monetary conditions and lower growth potential are affecting financial and debt stability, macroprudential instruments should introduce and strengthen debt restructuring mechanisms.
The report says that financial support should be directed to those most affected by rising food and energy prices, and large-scale financial assistance should be ended.
Growth forecast below historical average despite upward revision
The report noted that the global economy is estimated to grow by 3.4 percent in 2022, and the growth rate is expected to increase to 3.1 percent in 2024 after falling to 2.9 percent in 2023.
In its report released in October 2022, the IMF predicted that the global economy would grow by 3.2 percent in 2022, 2.7 percent in 2023 and 3.2 percent in 2024.
The report said that despite an upward revision to the growth forecast for this year, growth remained below the historical average of 3.8 percent.
It was noted that global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and to 4.3 percent in 2024, but inflation still exceeds the pre-epidemic level of 3.5 percent.
Upward revision of US and Eurozone economic growth forecasts for 2023
The IMF report also provided updated country growth projections. Accordingly, the US economic growth forecast for 2023 has been raised from 1 percent to 1.4 percent. The country’s economic growth forecast for 2024 has also been lowered from 1.2 percent to 1 percent.
While the growth forecast for the eurozone economy for this year has been raised from 0.5 percent to 0.7 percent, the forecast for 2024 has been revised up from 1.8 percent to 1.6 percent.
While Germany’s growth forecast, which was previously forecast to contract by 0.3 percent this year, was raised to 0.1 percent, Italy’s growth forecast was similarly raised and is expected to contract by 0.2 percent. this year. up to 0.6 percent.
While France’s 2023 growth forecast was kept at 0.7 percent, Spain’s growth forecast was cut from 1.2 percent to 1.1 percent.
Growth forecasts for next year were also cut from 1.5% to 1.4% for Germany, from 1.3% to 0.9% for Italy and from 2.6% to 2.4% for Spain. The growth forecast for the French economy for next year was left unchanged at 1.6 percent.
It was noted that the UK economy, which was previously forecast to grow by 0.3% this year, is expected to contract by 0.6% in 2023. The growth forecast for the UK economy for 2024 has been raised from 0.6% to 0.9%.
With these changes, the expected growth for the group of developed countries has been increased from 1.1 percent to 1.2 percent in 2023 and lowered from 1.6 percent to 1.4 percent in 2024.
China growth forecast for this year raised to 5.2 percent
China’s economic growth forecast for this year has been raised from 4.4 percent to 5.2 percent, according to the report, which also includes growth projections for emerging market and developing economies. The growth forecast for the Chinese economy for 2024 was maintained at 4.5 percent.
The Indian economy is expected to grow at 6.1 percent this year, while growth forecast for next year is unchanged at 6.8 percent.
In 2023, the Russian economy, which was previously estimated to contract by 2.3 percent this year, is projected to grow by 0.3 percent. The growth forecast for the Russian economy for 2024 has also been raised from 1.5 percent to 2.1 percent.
With these changes, the expected growth for emerging market and developing economies was increased from 3.7 percent to 4 percent in 2023 and lowered from 4.3 percent to 4.2 percent in 2024.
The growth forecast for the Turkish economy for 2023 was kept at 3 percent.
The IMF report, although Turkey’s economic growth forecast for this year is kept at 3 percent, it is projected that the country’s economy will grow by 3 percent in 2024.
The expected growth of the Turkish economy in 2022 was set at 5.5 percent.
In its report released last October, the IMF predicted that the Turkish economy would grow by 5 percent in 2022.
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