World Economic Outlook (WEO)

Why in News?

• The International Monetary Fund (IMF) has recently released its World Economic Outlook (WEO) Update, which has marginally improved the forecast for global growth in 2023.

Highlights

• The global growth, which was estimated at 3.4% in 2022, is now projected to fall to 2.9% in 2023 before rising to 3.1% in 2024.
• The IMF effectively rules out a global recession.
• Negative growth in global GDP (Gross Domestic Product) or global GDP per capita—which often happens when there is a global recession—is not expected.
• Instead, it expects global growth to bottom out in 2023 before starting to gather speed in 2024.
• Inflation is expected to have peaked in 2022 but the disinflation will be slow and take all of 2023 and 2024.
• About 84% of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022.
• Global inflation is set to fall from 8.8 % in 2022 (annual average) to 6.6 % in 2023 and 4.3 % in 2024––above pre-pandemic (2017–19) levels of about 3.5 %.
• One, monetary tightening all across the world — higher interest rates drag down overall demand for goods and services and that, in turn, slows down inflation.
• Two, in the wake of a faltering demand, prices of different commodities — both fuel and non-fuel — have come down from their recent highs.
• In 2023, advanced economies are expected to have an inflation of 4.6% while emerging economies will continue to face an inflation of 8.1%.
• India will be the world’s fastest growing economy in 2023 and 2024.
• Growth in India is set to decline from 6.8 % in 2022 to 6.1 % in 2023 before picking up to 6.8% in 2024, with resilient domestic demand despite external headwinds.