Freetown, SIERRA LEONE – The International Monetary Fund (IMF) has adjusted its global growth projection, revising it from an estimated 3.5 per cent in 2022 to 3.0 per cent for both 2023 and 2024. While the 2023 forecast is slightly higher than the one presented in the April 2023 World Economic Outlook (WEO), it remains modest by historical standards.
The IMF’s World Economic Outlook report highlights that the rise in central bank policy rates aimed at combating inflation continues to weigh on economic activity. Global headline inflation is expected to decrease from 8.7 percent in 2022 to 6.8 percent in 2023 and further to 5.2 percent in 2024. Underlying (core) inflation is anticipated to decline more gradually, with inflation forecasts for 2024 being revised upward.
The IMF notes that the recent resolution of the US debt ceiling issue and previous actions taken to stabilize US and Swiss banking have reduced immediate risks related to financial sector turmoil. However, the balance of risks for global growth remains tilted toward the downside. Factors such as persistently high inflation, intensified conflict in Ukraine, extreme weather-related events, and more restrictive monetary policies could lead to further challenges.
The report underscores the importance of central banks focusing on restoring price stability and strengthening financial supervision and risk monitoring to achieve sustained disinflation while ensuring financial stability. It also advises countries to provide liquidity promptly should market strains arise while mitigating the possibility of moral hazard. Additionally, building fiscal buffers and improving the supply side of the economy are recommended measures to facilitate fiscal consolidation and a smoother decline of inflation toward target levels. ZIJ/18/9/2023