Wahyu Dwi Anggoro
IDXChannel - The International Monetary Fund (IMF) is optimistic that the world's economy continues to gradually recover from the Covid-19 pandemic and Russia’s invasion of Ukraine.
"In the near term, the signs of progress are undeniable," said IMF Chief Economist Pierre-Olivier Gourinchas in a blog on Tuesday (25/7/2023).
"The COVID-19 health crisis is officially over, and supply-chain disruptions have returned to pre-pandemic levels. Economic activity in the first quarter of the year proved resilient, despite the challenging environment, amid surprisingly strong labor markets. Energy and food prices have come down sharply from their war-induced peaks, allowing global inflation pressures to ease faster than expected. And financial instability following the March banking turmoil remains contained thanks to forceful action by the US and Swiss authorities," he explained.
Nevertheless, the global economy is still facing many challenges, he stated.
"Under our baseline forecast growth will slow from last year’s 3.5 percent to 3 percent this year and next, a 0.2 percentage points upgrade for 2023 from our April projections. Global inflation is projected to decline from 8.7 percent last year to 6.8 percent this year, a 0.2 percentage point downward revision, and 5.2 percent in 2024," he revealed.
According to Gourinchas, the slowdown is concentrated in advanced economies, where growth will fall from 2.7 percent in 2022 to 1.5 percent this year and remain subdued at 1.4 percent next year. The euro area, still reeling from last year’s sharp spike in gas prices caused by the war, is set to decelerate sharply.
