On 11th April, the International Monetary Fund (IMF) released its outlook for the global economy for 2023 and 2024. According to the IMF, the outlook is uncertain against the backdrop of financial sector turmoil, high inflation, ongoing effects of Russia’s invasion of Ukraine, and three years of COVID-19 pandemic.
The IMF’s baseline forecast is for global growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before increasing slightly to 3.0 percent in 2024. In advanced economies, growth in 2023 is expected to be led by the United Sates (US), which is projected to grow at a rate of 1.6 percent, after which its growth is anticipated to slow to 1.1 percent in 2024. Meanwhile, economic contractions are expected in Germany and Japan this year, followed by an uptick in growth for both countries next year.
India is expected to lead the charge in emerging market economies, with an expected growth rate of 5.9 percent in 2023 and 6.3 percent in 2024. As has been the case lately, growth in China’s economy, though admirable when compared to advanced economies, remains a far cry from the many decades of double-digit growth previously. China is expected to grow by 5.2 percent this year, followed by a contraction in 2024 to 4.5 percent.
In Latin America and the Caribbean (LAC), economies are expected to grow at 1.6 percent in 2023 and 2.2 percent next year. In both instances, growth is projected well below the global average of 2.8 and 3.0 percent respectively. This suggests a fairly hard landing is ahead for LAC.
For the global economy on a whole, the IMF is predicting a rocky recovery. The Fund notes that this is the weakest growth profile since 2001, except for the global financial crisis of 2007/08 and the acute phase of the COVID-19 pandemic.
On a more positive note, the IMF predicts that global headline inflation is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 mainly due to lower commodity prices. However, on a less optimistic note, elevated rates of inflation are not expected to subside before 2025 in most cases. This suggests that higher prices are likely to linger for a couple more years.
Economic growth is important, but it is Beyond the Numbersnot and should not be an end in itself. Economic growth ought to redound to the overall improvement in the quality of life of the citizens of any country. A country can attain appreciable levels of economic growth, but this can be insufficient to create structural change if certain fundamental tenets are absent in a society, such as adequate infrastructure, proper healthcare, good education, quality jobs and a buoyant private sector. High and unsustainable debt levels can also nullify economic growth.
One of the challenges with the IMF’s outlook is that it focuses heavily on numbers, rather than some of the other preconditions for a thriving society, some of which were mentioned immediately above.
Of course, economic growth is vital, but not enough.
In a 7th April article in Foreign Affairs, Prime Minister of Barbados, Mia Mottley, and Rajiv Shaw, President of the Rockefeller Foundation, argued for the revitalization of the World Bank, the IMF, and the Development Finance System. Mottley and Shaw have promoted the idea of a new consensus, particularly for developing countries, around relieving unsustainable debt levels and investing for the future; accessing additional loans at below-market rates; and public, private, and philanthropic partnerships to expand access to public goods such as technological breakthroughs.
These are the kinds of initiatives that have the potential to go beyond the numbers.
Joel K Richards is a Vincentian national living and working in Europe in the field of international trade and development.
Email: [email protected]