IMF lifts 2023 global growth forecast to 3%

The International Monetary Fund on Tuesday moderately increased its 2023 global growth forecast, upping it to 3.0 percent from 2.8 percent in April, due to solid consumer spending in the United States and some other countries.

Still, the forecast is lower than the 3.5 percent growth estimated to have occurred in 2022. While noting that world economic activity was resilient in the first quarter, especially in the services sector, the IMF cautioned against downside risks, such as high inflation and interest rates, as well as a potential slowdown in the Chinese economy.

The IMF's updated World Economic Outlook report said its growth forecast for 2024 remains unchanged at 3.0 percent from the previous projection.

The IMF said growth in the United States is projected to stand at 1.8 percent in 2023, slowing down from the estimated 2.1 percent in the previous year but up 0.2 percentage point from April, driven by income gains and a pickup in vehicle purchases.

"However, this consumption growth momentum is not expected to last: Consumers have largely depleted excess savings accumulated during the pandemic, and the Federal Reserve is expected to raise rates further," the report said.

It said the world's largest economy's growth is expected to fall to 1.0 percent in 2024, down 0.1 point from the previous forecast.

Japan's growth is projected to increase to 1.4 percent this year from 1.1 percent in 2022, thanks to pent-up demand and long-standing accommodative monetary policies, and then shrink to 1.0 percent in 2024, "as the effects of past stimuli dissipate." The forecast for this year was revised up 0.1 point, but next year's projection remained unchanged.

With the World Health Organization declaring in May that COVID-19 is no longer a global emergency, a post-pandemic recovery in consumption has been seen particularly in tourism-dependent countries, such as Italy and Spain.

The euro area's growth is projected to reach 0.9 percent in 2023 and 1.5 percent the following year, both revised upward by 0.1 point from three months ago.

The Washington-based agency maintained China's growth estimate at 5.2 percent for this year and 4.5 percent for next year. It said consumption growth has evolved largely in line with the previous projections, "but investment has underperformed due to the ongoing real estate downturn."

© Kyodo News