The outlook for the global economy is brighter as China eases its zero-Covid policies and the world shows surprising resilience in the face of high inflation, elevated interest rates and Russia's ongoing war against Ukraine.
The International Monetary Fund believes that the world's economy will grow 2.9% this year. That forecast is better than the 2.7% expansion predicted by the IMF in October, though it is smaller than the 3.4% growth in 2022 predicted by the International Monetary Fund.
The IMF predicts that inflation easing will occur this year, due to aggressive interest rate hikes by the Federal Reserve and other major central banks. Consumer inflation is projected to fall from 8.8% last year to 6.6% in 2023 and 4.3% in 2024, according to the International Monetary Fund.
The chief economist of the International Monetary Fund, Pierre-Olivier Gourinchas, said at a news conference in Singapore that global conditions have improved as inflation pressures start to abate. The road back to a full recovery with sustainable growth, stable prices and progress for all has only begun. China's decision to lift anti-virus controls that had kept millions of people at home was a big factor in the upgrade to global growth. The recent reopening of China has paved the way for a faster than expected recovery, according to the International Monetary Fund. The International Monetary Fund expects China's economy to grow 5.2% this year, the second-biggest after the United States, up from its October forecast of 4.4%. In 2022, the Chinese economy eked out growth of just 3% - the first year in more than 40 years, according to the International Monetary Fund. The end of the virus restrictions is expected to revive activity in 2023.
China and India should account for half of this year's global growth, while the United States and Europe contribute 10%, according to Gourinchas.