The World Economic Outlook Projects Stronger Growth and Still High Inflation

The International Monetary Fund (IMF) released its July 2023 World Economic Outlook, projecting global economic growth will fall from 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. From IMF’s April projections, the growth outlook for this year improved by 0.2 percentage points from 2.8 percent to 3.0 percent. Advanced economies are expected to see a more pronounced slowdown, falling from 2.7 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024.

Global headline inflation is projected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024, though core inflation is expected to go down much more gradually. These numbers represent a slightly more optimistic outlook for this year, from 7.0 percent projected in April to 6.8 percent now.

The report recommends that fiscal safeguards be put in place along with “credible medium-term fiscal consolidation” to ensure debt sustainability, as fiscal deficits and government debt are currently above pre-pandemic levels. In the biannual Fiscal Monitor, the IMF expanded on this, suggesting that well-targeted fiscal restraint can be used in conjunction with monetary policy to bring inflation down while protecting lower-income communities. Read our paper on additional ways to use fiscal policy to fight inflation and our fiscal blueprint for reducing debt and inflation.