2023 Is Now Seen as a 'Turning Point' for Economy

IMF upgrades its world forecast, thinks a global recession is less likely
By John Johnson,  Newser Staff
Posted Jan 31, 2023 6:30 AM CST
This Time, a Recession Forecast Actually Improves
A shopper checks out an item in a Target store in Pittsburgh on Jan. 23, 2023.   (AP Photo/Gene J. Puskar)

A new economic forecast includes what has become a rare thing of late: good news. Or, at least, better news. The International Monetary Fund said Monday that it thinks a global recession probably won't happen, reports the New York Times. A number of factors— including easing inflation, China's end of draconian COVID restrictions, and surprisingly resilient consumer spending in the US and abroad—contributed to the rosier forecast from October, per the Wall Street Journal. “The year ahead will still be challenging,” said Pierre-Olivier Gourinchas, the IMF’s chief economist. “But it could well represent the turning point, with growth bottoming out and inflation declining." Wild cards are the war in Ukraine and a potential worsening of COVID cases in China.

  • Growth/inflation: The IMF projects 2.9% growth in the global economy in 2023, up from 2.7% in October. It expects that growth to rise to 3.1% next year. Inflation is expected to drop to 6.6% this year from 8.8% last year, and decline further to 4.3% next year.
  • US recession: “There is a narrow path that allows the US economy to escape a recession altogether, or if it has a recession, the recession would be relatively shallow,” says Gourinchas.
  • Interest rates: The IMF said the raising of interest rates by central banks around the world is helping to tame inflation, and it warned the banks not to ease up now. The message comes one day before the Federal Reserve in the US is expected to raise rates by another 0.25%, per CNBC.
(More International Monetary Fund stories.)

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