The International Monetary Fund (IMF) slightly lowered its global growth forecasts for 2023 on Tuesday due to a slowing pace of interest rate hikes, but warned that severe disruptions in the financial system could reduce output to levels close to recession. In its latest World Economic Outlook report, it mentioned that the risks of contagion in the banking system were contained through strong policy measures after the collapse of two American banks and the forced merger of Credit Suisse. These disruptions have increased the uncertainty stemming from rising inflation and the indirect effects of the war in Ukraine.
The IMF stated at the outset of the spring meetings with the World Bank in Washington that "with the recent increase in financial market volatility, the uncertainty surrounding global economic prospects has increased." It added: "The ambiguity is increasing and the balance of risks is shifting decisively to the downside when the financial sector is unstable."
Real global GDP growth is expected to reach 2.8 percent in 2023 and three percent in 2024, a sharp decline from growth of 3.4 percent in 2022 due to tightening monetary policy.
