World Economic Outlook

World Economic Outlook

News: Recently, the International Monetary Fund (IMF) has released its World Economic Outlook (WEO) Update, which has marginally improved the forecast for global growth in 2023.

Key Findings:
On India
 India will be the world’s fastest growing economy in 2023 and 2024.
 Growth in India is set to decline from 6.8 % in 2022 to 6.1 % in 2023 before picking up to 6.8% in 2024, with resilient domestic demand despite external headwinds.

On Global Growth
 The global growth, which was estimated at 3.4% in 2022, is now projected to fall to 2.9% in 2023 before rising to 3.1% in 2024. The IMF effectively rules out a global recession.
 Negative growth in global GDP (Gross Domestic Product) or global GDP per capita—which often happens when there is a global recession is not expected. Instead, it expects global growth to bottom out in 2023 before starting to gather speed in 2024.

On Inflation
 Inflation is expected to have peaked in 2022 but the disinflation will be slow and take all of 2023 and 2024.
 About 84% of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022.
 Global inflation is set to fall from 8.8 % in 2022 (annual average) to 6.6 % in 2023 and 4.3 % in 2024.
 In 2023, advanced economies are expected to have an inflation of 4.6% while emerging economies will continue to face an inflation of 8.1%.

What are the reasons for slowing of price rise?
 One, monetary tightening all across the world — higher interest rates drag down overall demand for goods and services and that, in turn, slows down inflation.
 Two, in the wake of a faltering demand, prices of different commodities both fuel and non-fuel have come down from their recent highs.