United States: Due to "surprisingly resilient" demand in the United States and Europe, falling energy prices, and China's economy opening up after Beijing rolled back its tough COVID-19 restrictions, the international currency Fund (IMF) has slightly raised its outlook for the global increase for 2023.
It continues to predict that global growth will slow this year relative to 2022, but by a smaller amount than in October. The IMF now expects growth of 2.9% in 2023, up from the 2.7% forecast in October, as opposed to last year's 3.4% growth.
That's the information found in its most recent World Economic Outlook, which warned that a global recession could easily hit this year. The report said there are growing concerns in major advanced economies that central banks will continue to tighten monetary policy in an effort to combat inflation.
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After forecasting 1.0% growth in October, the IMF now projects US GDP growth of 1.4% this year, followed by 2.0% growth in 2022. This can be attributed to higher-than-anticipated investment and consumption in the third quarter of 2022, as well as a strong labor market and solid consumer balance sheet.
The outlook for the eurozone is even better, rising from 0.5% to 0.7% in October, although it is still below the 3.5% growth expected in 2022.
China's growth outlook has been sharply upgraded to 5.2% from 4.4% forecast by the IMF in October. China's growth rate was slashed to 3.0% in 2022 due to zero-covid policies, the first time it has happened in more than 40 years.
India's outlook is still positive, with growth predicted to slow to 6.1% in 2023 before rising again to 6.8% in 2024, before matching its performance in 2022.
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The IMF predicts only one major economy to contract this year: Britain. As households grapple with rising living costs, including energy and mortgages, it predicts a 0.6% drop in GDP.
The IMF has cut its forecast for world growth in 2024 to 3.1% from 3.2% in October.
Although the US central bank has slowed the rate of interest rate hikes, it still expects "moving growth" as it battles inflation. The Federal Reserve raised its benchmark overnight interest rate by 25%, bringing it to a range of 4.50-4.75%. This is followed by six more significant increases, including three straight increases of 3/4 of a percentage point each.
Although inflation is starting to slow, according to Federal Reserve Chairman Jerome Powell, he expects a few more rate hikes in the coming months and does not see the Fed cutting rates this year.
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US job opportunities unexpectedly rose in December, indicating that demand for workers is still strong despite high interest rates and rising recession fears.
This could put the Fed on its path to tighten monetary policy. However, the fact that consumer spending declined for the second month in a row in December suggests that overly aggressive monetary policy may not be necessary.