As the year’s end approaches, global inflation looks set to reach an annual average of 6.9%, down from 8.7% in 2022, according to the International Monetary Fund (IMF).
According to the IMF’s World Economic Outlook, global inflation will continue to decrease to 5.8% in 2024, and although its bearish data down it contends that inflation was “uncomfortably high”.
Core inflation, excluding food and energy, is expected to drop more gradually to 6.3% this year from 6.4% in 2022.
Next year it’s expected to decrease to 5.3%.
The IMF highlighted problems in tight labour markets and “stickier-than-expected” services inflation.
The report was released at the IMF and World Bank annual meetings held in Marrakech, Morocco, earlier this week.
On gross domestic product growth, it is forecast that real GDP growth in 2023 will remain unchanged at 3%.
However, it cut its 2024 forecast to 2.9%.
IMF chief economist, Pierre-Olivier Gourinchas, said the global economy continued to recover from Covid-19, Russia’s invasion of Ukraine and last year’s energy crisis which caused “mediocre” medium-term prospects.
Gourinchas also highlighted other concerns to be the risks related to China’s property crisis, volatile commodity prices and geopolitical fragmentation.
The Israel-Palestinian conflict broke out just as officials from 190 countries began the Marrakech meeting, but came after the IMF’s quarterly outlook was locked down on September 26.
Hence his assessment hadn’t factored in the outbreak of war in Israel over the past weekend.
Gourinchas said it was too early to say how a major escalation would affect the global economy.
“Depending how the situation might unfold, there are many different scenarios that we have not even started to explore, so we cannot make any assessment at this point yet,” Gourinchas said.
He added that the IMF was monitoring the situation, noting that oil prices had risen some 4% in recent days, causing concern that oil production or transport could be interrupted.
Research by the IMF showed that a 10% increase in oil prices would dampen global output by about 0.2% in the following year and boost global inflation by about 0.4%,” he added.
