Feb 10, 2023

Finally, the forecast for the global economy is revised up

There’s been lots of bad news for the global economy over the last year and a half. But the IMF’s latest forecast offers a small glimmer of hope.

Central banks across the world have been raising interest rates to battle inflation, so with the sharp tightening of global financial conditions, global GDP growth is expected to slow further this year, down from 3.4% in 2022 to 2.9% in 2023. If realized, this subdued rate of growth means the global economy would suffer a mild recession this year.

That’s more bad news, of course, but optimists can now point to two things.

First, the IMF sees growth bottoming out this year, and improving next year.

Second, as our Chamber Chart shows, after five consecutive quarters of forecast downgrades, the IMF finally revised its forecast up, reflecting improved outlooks across the world’s key economies, including:

  • China’s re-opening after abandoning COVID-zero policies;
  • A warmer winter in Europe which lessened the pressures from the ongoing energy crisis; and
  • Better-than-expected recent United States data.

While the upgrade is modest, it represents some good news, and after a long string of bad news, it is finally a move in the right direction.

For more great #cdnecon charts from our Business Data Lab team, check our recent take on the Bank of Canada’s January Monetary Policy Report.

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