IMF dims outlook for 2023 global economy

WASHINGTON (AP) — The International Monetary Fund is downgrading its outlook for the world economy for 2023, citing a long list of threats that include Russia's war against Ukraine, chronic inflation pressures, punishing interest rates and the lingering consequences of the global pandemic.

The 190-country lending agency forecast Tuesday that the global economy would eke out growth of just 2.7 per cent next year, down from the 2.9 per cent it had estimated in July.

The IMF left unchanged its forecast for international growth this year — a modest 3.2 per cent, a sharp deceleration from last year's 6 per cent expansion.

“The worst is yet to come,″ said IMF chief economist Pierre-Olivier Gourinchas.

Three major economies, the United States, China and Europe, are stalling. Countries accounting for a third of global economic output will contract next year, suggesting that 2023 “will feel like a recession″ to many people around the world, he said Tuesday.

In its latest estimates, the IMF slashed its outlook for growth in the United States to 1.6 per cent this year, down from a July forecast of 2.3 per cent. It expects meagre 1 per cent US growth next year.

The fund foresees China's economy growing just 3.2 per cent this year, down drastically from 8.1 per cent last year. Beijing has instituted draconian zero-COVID policy and has cracked down on excessive real estate lending, disrupting business activity. China's growth is forecast to accelerate to 4.4 per cent next year, still tepid by Chinese standards.

In the IMF's view, the collective economy of the 19 European countries that share the euro currency, reeling from crushingly high energy prices caused by Russia's attack on Ukraine and Western sanctions against Moscow, will grow just 0.5 per cent in 2023.

The world economy has endured a wild ride since COVID-19 hit in early 2020. First, the pandemic and the lockdowns it generated brought the world economy to a standstill in the spring of 2020. Then, vast infusions of government spending and ultra-low borrowing rates engineered by the Federal Reserve and other central banks fuelled an unexpectedly strong and speedy recovery from the pandemic recession.

But the stimulus came at a high cost. Factories, ports and freight yards were overwhelmed by powerful consumer demand for manufactured goods, especially in the United States, resulting in delays, shortages and higher prices.

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