By Zainab.email@example.com in Marrakech
Marrakech, MOROCCO – The global economy, navigating its way through the aftermath of the pandemic and the Ukraine conflict, is demonstrating remarkable resilience; however, growth remains sluggish and uneven.
Pierre‑Olivier Gourinchas, Director of the Research Department at the International Monetary Fund (IMF), made this observation during the launch of the World Economic Outlook (WEO) at the Annual Meetings in Marrakech, characterizing the global economy as “limping along, not sprinting.”
Under the IMF’s baseline forecast, growth is projected to decelerate from 3.5 percent last year to 3 percent this year and further to 2.9 percent in the following year, marking a 0.1 percentage point downgrade for 2024. This remains well below historical averages.
“Significant disparities are emerging, with the slowdown more pronounced in advanced economies compared to emerging markets and developing economies,” Director Gourinchas stated.
He elaborated on these disparities among advanced economies, citing a revision upward for the U.S., driven by resilient consumption and investment, and a downward revision for the euro area, primarily attributed to tighter monetary policy and the energy crisis.
However, there is also divergence among emerging markets and developing economies, with China grappling with growing headwinds, while Brazil, India, and Russia have received upward revisions. Although there is encouraging news on inflation, Gourinchas cautioned that the target remains elusive for most countries until 2025.
“Headline inflation is on a decelerating trend, and core inflation, excluding food and energy prices, is projected to decline more gradually. Overall, most countries are not expected to achieve their inflation targets until 2025,” he noted. “Collectively, our projections increasingly align with a soft-landing scenario, wherein inflation eases without a significant downturn in economic activity. This is particularly true for the U.S., where the unemployment rate is now on a more favourable trajectory.”
In Sub-Saharan Africa, there has been a slight downward revision in growth expectations for the region. Gourinchas explained that they anticipate growth of approximately 3.3 percent this year, reflecting a 0.2 percentage point reduction. Similarly, there is a modest downward revision for the following year, with expectations around 4 percent.
Daniel Leigh, Division Chief at the Research Department for Sub-Saharan Africa, clarified that their analysis predicts growth bottoming out in 2023 before rebounding in 2024. Inflation, while peaking, still lingers in double digits for more than 40 percent of the economies.
“We anticipate African growth at 3.3 to 4 percent. While this surpasses the global average, it falls short of Africa’s potential and the urgency to accelerate progress toward higher-income levels,” Leigh emphasized. “Various shocks are impacting growth, particularly external ones stemming from elevated food and fertilizer prices related to the Ukraine conflict, funding constraints that make capital harder to secure, and persistently high spreads and exchange rate pressures.”
Director Gourinchas concluded his opening remarks by offering recommendations, urging multilateral cooperation to counter some of the challenges facing the global economy. He called on countries to refrain from implementing policies that undermine the World Trade Organization’s role and distort international trade. Furthermore, he advocated for safeguarding the flow of critical minerals and agricultural commodities through green corridors to reduce volatility, food insecurity, and expedite the transition to a greener economy. ZIJ/11/10/2023