By Tom Burnett CFA
On January 30, 2023, the International Monetary Fund (“IMF”) issued its revised estimates for global GDP growth in 2023 and 2024. The latest forecast is an update from the prior report issued in October 2022. The IMF now sees global GDP growth of 2.9% this year, compared to its October 2022 estimate of 2.7%. In 2022, the global growth figure was 3.4% as the world economies continued to recover from the Covid-19 pressures on employment and growth.
The recent estimates are higher than the October 2022 forecasts for two basic reasons—the reduction in inflation expectations and the re-entry of China into the global economies after its ‘lock down’ policies. Global inflation is now thought to average 6.6% this year, down from 8.8% in 2022. The estimate for 2024 inflation is now 4.3%, well below recent levels. China’s GDP growth is now forecast at 5.2% this year, much higher than the 4.4% rate issued in the October 2022 forecast. China’s growth in 2022 was 3.0%, so the expected growth trend is significant.
The U.S. GDP growth rate is now forecast at 1.4% this year, up from just 1.0% in the October 2022 report. The 2022 growth rate was 2.0%. Clearly, higher interest rates have moved the 2023 estimate below the 2022 growth rate.
World Trade Volume is now expected to grow at just 2.4% this year after achieving growth rates of 10.4% in 2021 and 5.4% in 2022. The latest World Trade Volume estimate for 2023 is down from 2.5% in the October 2022 report.
The IMF will issue its next Global GDP Growth Forecast report in July 2023.
Tom Burnett CFA is Director of Research