October 30, 2023
The global economy will slow to 3.1% in 2023 as tightening monetary policy, the war in Ukraine and the lingering effects of the COVID-19 pandemic continue to weigh on growth, according to a report. The global economy will remain weak in 2024 and global gross domestic product will grow by 3.1%.
Global consumer prices will fall to 7 percent this year, down from 9.2 percent in 2022, and inflation will fall further to 5.8 percent in 2024, according to the IFF’s Global Finance and Development Report 2023.
Looking ahead, the global economy still faces strong headwinds: Core inflation in many countries still remains well above central banks’ targets, as geopolitical issues, including the war in Ukraine, could further shake global energy and food markets; a tightening of monetary policy in an effort to control inflation could further dampen demand; geopolitical tensions could further trigger an economic slowdown and runaway inflation; and uncertainty over China’s economic growth momentum this year could have a negative impact on global growth.
The report recommends tightening monetary policy without sacrificing global financial stability, consolidating fiscal position while protecting vulnerable groups, accelerating structural reform, deepening international cooperation and promoting multilateralism.
The United States economy will expand 2% in 2023, while the European Union’s GDP is projected to grow 0.8% this year and 1.5% in 2023.
China’s GDP is projected to grow 5.2% in 2023 and slow to 5% in 2024, as the country implements a series of stimulus packages.
Vulnerabilities in China’s financial system are unlikely to become systematic risks, the report added.