IMF strikes more upbeat note on world economy

The IMF expects the global economy to slow down this year, but not as substantially as it projected three months ago when it warned of recession risks for advanced and emerging economies.

"The outlook is less gloomy than in our October forecast, and could represent a turning point, with growth bottoming out and inflation declining," IMF research director Pierre-Olivier Gourinchas said.

The IMF's latest World Economic Outlook forecasts global growth of 2.9pc this year, rebounding to 3.1pc in 2024. The world economy grew by 3.4pc in 2022. The 2022 growth estimate and the 2023 forecast are both 0.2 percentage points higher than in the IMF's October outlook.

IMF forecasts are used by many economists, including at the IEA, to model oil demand projections.

Energy-intensive economies of China and India are projected to account for most of the global growth in 2023. The IMF forecasts China's 2023 growth at 5.2pc, as the country emerges from a slowdown caused by its drastic Covid-19 containment measures. "India remains a bright spot," Gourinchas said, with the country's economy projected to grow at 6.1pc this year and 6.8pc in 2024, after recording 6.8pc growth in 2022.

The advanced economies' group is slowing down more markedly, but it is still expected to do better than the IMF previously expected, with most countries — except for the UK — forecast to avoid a recession. In case of European countries, the IMF notes their unexpected resilience to the energy price shocks resulting from Russia's invasion of Ukraine, including the reduction in natural gas supply from Europe. The growth forecast for the eurozone is still lower than the historical average, at 0.7pc for 2023.

The IMF has also significantly scaled back its 2023 growth forecast for Saudi Arabia and now expects the largest OPEC producer's economy to grow by 2.6pc this year, down from 8.7pc in 2022. The downgrade reflects lower oil prices and production cutbacks following the OPEC+ decision late last year to reduce output quotas.

By Haik Gugarats