Optimistic Outlook
The Oasis Reporters
July 26, 2023
By FP
Let’s start the day on a positive note, shall we? Global risk of an economic meltdown is projected to decrease this year, according to a new World Economic Outlook report by the International Monetary Fund (IMF).
The data, released on Tuesday, predicts global growth at 3 percent this year, 0.2 percentage points higher than the IMF’s last prediction in April. Next year’s growth forecast remains unchanged at 3 percent.
However, we’re not completely out of the woods yet. High inflation continues to trouble G-20 nations; developing countries are facing brutal debt distress; and international crises such as Russia’s war in Ukraine are expected to increase the price of food, fuel, and fertilizer—which will likely be exacerbated by Moscow leaving the Black Sea Grain Initiative.
“In the near term, the signs of progress are undeniable,” IMF chief economist Pierre-Olivier Gourinchas said. “Yet many challenges still cloud the horizon, and it is too early to celebrate.”
Of 190 countries surveyed, the United Kingdom saw the biggest win: a larger-than-expected jump of 0.7 percentage points to 0.4 percent growth, spurred by strong consumer spending. With this upward revision, the U.K. is expected to avoid a recession. But London wasn’t the only economy to receive good news.
The United States is now more likely than previously predicted to decrease inflation rates without excessive job losses, with the IMF projecting GDP growth at 1.8 percent in 2023.
China’s economy is expected to grow by a modest 5.2 percent in 2023—and just 4.5 percent in 2024. Poor real estate investments, weak foreign demand, devastating zero-COVID policies, and high youth unemployment have all contributed to Beijing’s domestic shortcomings. The biggest loser of all, though, appears to be Germany. The European nation was the only IMF member whose economy is predicted to contract. Manufacturing production levels in the country fell for the third consecutive month in June and at their fastest rate since May 2020, dragging down the eurozone’s growth to be only 0.9 percent this year.
So long as no major financial crises strike, the IMF report suggests that the world’s economic future looks bright. Still, Gourinchas urged central banks to avoid premature easing until they are confident the economy is stable—advice the world’s rate-setters appear to be taking. On Wednesday, the U.S. Federal Reserve is expected to increase interest rates by a quarter point.
On Thursday, the European Central Bank will likely raise rates to their highest level since 2000. And next week, the Bank of England is predicted to hike rates for the 14th consecutive time.
Foreign Policy.
