IMF slashes GDP forecasts, stating that the international economy is heading for the most vulnerable increase since 1990

April 12, 2023: On Tuesday, the International Monetary Fund released its weakest global growth anticipations for the medium term in over 30 years.

The Washington, D.C.-based institution stated that five years from now, global growth is antics to be approximately 3%, the lowest medium-term forecast in an IMF World Economic Outlook report from 1990.

“The world economy is not currently anticipated to return over the medium term to the prices of growth that prevailed prior pandemic,” the fund stated in its recent economic outlook.

The weaker developed prospects stem from the increasing economies like South Korea and China have made in surging their living standards, and the IMF said, and slower global labour force growth and geopolitical fragmentation, like Brexit and Russia’s invasion of Ukraine.

Therefore, the IMF anticipates a global increase of 2.8% and 3% in the short term in 2024, below the fund’s estimates published in January. The new projections are cut by 0.1 percentage point for both this next.

“The anaemic outlook reflects the tight policy stances which need to bring down inflation, the fallout from the latest deterioration in financial conditions, the ongoing war in Ukraine, and increasing geoeconomic fragmentation,” the IMF stated in the same report.

Looking at some regional breakdowns, the IMF experienced the United States economy, which expanded by 1.6% this year and the eurozone growing by 0.8%. Therefore, the United Kingdom is seen contracting by 0.3%.

According to the IMF, China’s GDP is expected to increase by 5.2% in 2023 and 5.9% in India. The Russian economy, contracting by more than 2% in 2022, is increasing by 0.7% this year.

“The initial forces that affected the world in 2022 were central banks’ tight monetary stances to decrease inflation, limited fiscal buffers to absorb shocks between historically high debt levels, commodity costs spikes and geoeconomic with Russia’s war in Ukraine, and China’s economic reopening seem likely to continue into 2023. But these forces are overlaid by and interacting with new financial stability concerns,” the IMF has stated.