The International Monetary Fund (IMF) released its latest World Economic Outlook Report at its autumn annual meeting in Morocco on Wednesday. The report predicts that growth in advanced economies will slow significantly this year and next, while the forecast for global growth next year has been revised down to 2.9 per cent.
The global economy is continuing to recover from the severe shocks of the past few years, but the recovery is slow and uneven. The delayed economic impact of the continued tightening of monetary policy by major central banks in Europe and the United States is becoming increasingly apparent, and the risk of government debt in some countries has led to a decline in fiscal support for the economy. In addition, the frequent occurrence of extreme weather around the world is also a drag on the economy.
The report expects the global economy to grow by 3.0% this year, unchanged from its previous forecast in July. But the report expects the global economy to grow 2.9 percent in 2024, down 0.1 percentage point from its July forecast. The report's forecast for world economic growth this year and next is below the 3.8% annual average from 2000 to 2019.
△ International Monetary Fund report data chart
The report also predicts that economic growth in advanced economies will slow significantly this year, from 2.6 percent in 2022 to 1.5 percent this year.
In contrast, emerging market and developing economies in Asia are poised for steady growth, with growth expected to rise to 5.2 per cent this year. China's impact on the global economy has attracted much attention.
As mentioned in the latest World Economic Outlook Report, the lagging impact of continued monetary policy tightening by major central banks in Europe and the United States on the economy is intensifying. Liu Ying, a researcher at the Chongyang Institute for Financial Studies of Renmin University of China, said in an interview with the China Media Group Global Information broadcast that developed economies such as the United States and Europe are facing economic contraction, sluggish growth, high debt and other difficulties. This is the result of monetary tightening:
The economy is down. The US manufacturing PMI index has been below the 50-growth line for nearly a year, while the eurozone manufacturing PMI has been below the 50-growth line for more than a year.
Economic growth is sluggish. The Federal Reserve aggressively raised interest rates 11 times by 525 basis points, high interest rates have severely inhibited consumption, inhibited corporate investment, and thus inhibited economic growth. The International Monetary Fund's forecast for world economic growth this year and next, especially for advanced economies such as the United States and Europe, is almost halved compared with last year, and it may be further lowered next year.
The stakes are high. This year, a series of small and medium-sized banks in the United States have failed, and the US debt has quickly climbed to more than 33 trillion US dollars, and the United States has fallen into the dilemma of high interest rates, high debt and high risk. According to the International Monetary Fund's most recent forecast, global inflation will only fall back to 6.9% this year, and core inflation may be harder to control. Advanced economies face high inflation and low growth. This conundrum of high and low interest rates requires them to remain high, thereby stifling economic recovery.
The latest World Economic Outlook predicts steady growth in Asia's emerging market and developing economies. Liu Ying believes that after the COVID-19 pandemic, the world economic recovery has shown a trend of rising from the south to the north, rising from the east to the west, and the future economic growth potential of emerging markets and developing economies in Asia comes from several aspects:
First, there is ample room for both macro and monetary policies. Inflation in Asian economies, including China's, is largely under control, which gives countries a relatively rich policy toolbox, in contrast to the inability of the United States and Europe to cope with high inflation.
Second, as emerging markets and developing countries mark the 10th anniversary of the Belt and Road Initiative, infrastructure has improved, especially transport infrastructure connectivity among relevant countries has been strengthened, and soft connectivity among countries has been further strengthened with the implementation and entry into force of the Regional Comprehensive Economic Partnership Agreement covering ASEAN, China, Japan, South Korea and Australia and New Zealand. Tariff and non-tariff barriers have been reduced to varying degrees, and intra-industry trade and inter-industry trade have been strengthened, which has expanded the room for rapid economic development of various countries.