Eric Martin
Bloomberg
July 25, 2023
- GDP this year seen expanding 3%, from 2.8% forecast in April
- High rates, persistent inflation, sluggish China among dangers
The International Monetary Fund raised its outlook for the world economy this year, estimating that risks have eased in recent months after the US averted a default and authorities staved off a banking crisis on both sides of the Atlantic.
Global gross domestic product will expand 3% in 2023, the IMF said in an update to its World Economic Outlook released Tuesday. While that’s still a slowdown from 3.5% growth last year, it’s faster than its 2.8% projection in April.
“The recent resolution of the US debt ceiling standoff and, earlier this year, strong action by authorities to contain turbulence in US and Swiss banking, reduced the immediate risks of financial sector turmoil,” the IMF said. “This moderated adverse risks to the outlook.”
The Washington-based fund left its global growth expectation for next year unchanged at 3%.
The fund is among a growing number of voices that see a potential soft landing in the US. Economists in a Bloomberg survey this month boosted estimates for GDP growth in the second and third quarters, although they still say there’s a 60% chance the US will fall into recession in the next 12 months.