London: World inflation will continue - New IMF research indicates that the rebuilding of global supply chains, effective policy measures to support households, and surprisingly resilient private demand contributed to the global economy performing slightly better than anticipated in late 2022.
In 2022, the global GDP grew by 3.4%, which is still less than the long-term average rate of 3.8%. As usual, developing and emerging economies outperformed more advanced ones.
Due to monetary tightening and persistent inflation, short-term projections for global growth are for +2.9% in 2023 and +3.1% in 2024, both of which will be quite low.
Also Read: Economic Survey 2023 LIVE: Rupee may remain under pressure
According to current estimates, global inflation peaked in 2022 at +8.8% but will continue to rise over the next two years, reaching +6.6% in 2023 and +4.3% in 2024.
The UK is predicted to enter a recession in 2023, with growth estimated to be -0.6%, before resuming sluggish growth in 2024. This is a sharp downward revision from the forecasts from October. The IMF's predictions now match those of other organisations like the OBR and Bank of England.
Also Read: Rupee gains 12-ps against US Dollar ahead of Union Budget
The UK is the only advanced economy projected to experience negative growth in 2023; other major European nations are anticipated to experience modest growth in that year. The main causes of the economic downturn are stricter monetary and fiscal regulations as well as household exposure to retail energy prices.
Although the strategic environment is still uncertain, the balance of risks is against us (ie: there is a high chance that outcomes will undershoot estimates).
The report discusses the necessity of monetary tightening and close coordination between central banks to achieve "disinflation," or falling rates of inflation.
Notably, it makes no mention of "deflation" (i.e., falling prices), implying that households all over the world will continue to feel the burden of higher living expenses.
Also Read: BUDGET Key Highlights: FM presents Union Budget 2023
According to the report, policy support for households should continue, but it should be specifically targeted at those who need it the most because universal support is deemed unsustainable.
The IMF concludes by noting that funding for sustainability and the "green transition" continues to be a top priority. The UK government recently unveiled its new Environmental Improvement Plan 2023, which is coincidental.