05-02-2023, 09:19 PM
Why does the IMF no longer forecast a global recession*?
#Econgram_World
Facts:
1) The IMF predicts the global GDP to increase by 2.9% in 2023, down from 3.4% growth in 2022. In 2024, however, the global output growth is forecasted to rebound to 3.1%.
2) In contrast, the IMF previously predicted that a third of the world economy would experience a recession this year.
Analysis:
1) Indeed, the IMF predicts economic growth to slow down this year. However, the updated forecast is more optimistic than the previous one: the global recession would probably be evaded. That is because of several factors:
- Aggressive contractionary monetary policy*. The world CBs actions eased the inflationary pressures.
- The depreciation of the American dollar. As the Fed slowed the rate rises, the dollar weakened. That assists emerging economies pay off their debt.
- China’s reopening. China’s economic expansion would help other countries grow their exports.
- The energy crisis in Europe became less severe.
- Inefficiency of Western sanctions, leading to a projection of Russian GDP growth.
2) Nonetheless, the war in Ukraine brought fragmentation among countries. That could impede global economic cooperation. Hence, any forecast is not reliable.
Inspired by NYT
The Econgram
https://www.nytimes.com/2023/01/30/busin...tlook.html
#Econgram_World
Facts:
1) The IMF predicts the global GDP to increase by 2.9% in 2023, down from 3.4% growth in 2022. In 2024, however, the global output growth is forecasted to rebound to 3.1%.
2) In contrast, the IMF previously predicted that a third of the world economy would experience a recession this year.
Analysis:
1) Indeed, the IMF predicts economic growth to slow down this year. However, the updated forecast is more optimistic than the previous one: the global recession would probably be evaded. That is because of several factors:
- Aggressive contractionary monetary policy*. The world CBs actions eased the inflationary pressures.
- The depreciation of the American dollar. As the Fed slowed the rate rises, the dollar weakened. That assists emerging economies pay off their debt.
- China’s reopening. China’s economic expansion would help other countries grow their exports.
- The energy crisis in Europe became less severe.
- Inefficiency of Western sanctions, leading to a projection of Russian GDP growth.
2) Nonetheless, the war in Ukraine brought fragmentation among countries. That could impede global economic cooperation. Hence, any forecast is not reliable.
Inspired by NYT
The Econgram
https://www.nytimes.com/2023/01/30/busin...tlook.html
