Global Inflation to Cool Down in 2023 and 2024 amid Economic Growth

By Indu Tyagi Ketan , 07 February, 2023

The inflation crisis has gripped the economy of 2022 for many reasons, including geo-political reasons. But recent studies by International Monetary Fund (IMF) predict the recession is a slowdown. Although the outlook is not that rosy since significant headwinds await ahead.

Reports by the IMF note that global growth is expected to drop from estimated 3.4 percent in 2022 to 2.9 percent in 2023 and again rise to 3.1 percent in 2024. In 2023, the progress in October is estimated to be 2.7 percent as IMF no longer sees a global downturn, with fewer countries facing recession in 2023.

The research by IMF also anticipates global inflation to come down to 6.6 and 4.3 percent in 2023 and 2024, respectively. It is lower than the 8.8 percent inflation seen in 2022. IMF's chief economist Pierre-Olivier Gourinchas wrote in a report that "economic growth proved resilient in the third quarter of 2022 with strong labour markets, robust household consumption and business investment, and better adaptation of the energy crisis in Europe."

Again, amid the inflation crisis, the priority was always to achieve sustained disinflation, as per the reports. According to IMF, it is necessary to strengthen debt restructuring frameworks and deploy macroprudential tools due to tighter monetary conditions and slow growth affecting financial stability. But on the downside, risks remain for this recovering economy, as the Russia-Ukraine could further escalate; China’s health outcomes could be a hurdle in the recovery and requirement of tight monetary policies for inflation.

Thus, the road to full recovery is only initiated with stable prices, overall progress, and sustainable growth, according to Gourinchas report.