IMF upgrades global economic outlook for 2023

The IMF has slightly upgraded its 2023 growth projection for the global economy but warns of sluggish expansion later in the decade.

"The global economy continues to gradually recover from the pandemic and Russia's invasion of Ukraine," IMF director of research Pierre-Olivier Gourinchas said today. "In the near term, the signs of progress are undeniable."

The IMF World Economic Outlook report, released today, forecasts global growth of 3pc both this year and in 2024. The 2023 forecast is 0.2 percentage points higher than in the IMF's April report. The world economy grew by 3.5pc in 2022. IMF forecasts are used by many economists, including at the IEA, to model oil demand projections.

The slightly better outlook for 2023 reflects measures the US and Swiss financial regulators have taken to address the fragility of the financial sector. The IMF has dialed down its previous dire warnings of potential contagion from the failures of major Swiss and US banks. The IMF has upgraded its 2023 GDP growth forecast by 0.2 percentage points for the US and for the broader, advanced economies group, to 1.8pc and 1.5pc, respectively.

The 2023 GDP growth forecast for China remained unchanged at 5.2pc, even though the IMF noted the Chinese economy's weaker than expected recovery from the effects of the Covid-19 pandemic. "The recovery following the re-opening of its economy shows signs of losing steam amid continued concerns about the property sector, with implications for the global economy," Gourinchas said.

The IMF cut Saudi Arabia's projected GDP growth for 2023 to 1.9pc, from the previous 3.1pc, after the leading Opec producer announced oil production cuts.

Russia's GDP growth forecast was adjusted higher to 1.5pc for 2023, with IMF researchers citing "hard data" on retail trade, construction, and industrial production that suggested strong economic performance in January-June.

Economic growth in 2024-28 will remain low by historical standards, with the slowdown more pronounced in the advanced economies, the IMF said.

By Haik Gugarats