IMF Predicts Global Economic Growth Slowdown in 2023

The International Monetary Fund (IMF) recently released its World Economic Outlook update, predicting that global economic growth will drop from an estimated 3.4 per cent in 2022 to 2.9 per cent in 2023 before rising to 3.1 per cent in 2024. Inflation is also projected to fall from 8.8 per cent in 2022 to 6.6 per cent in 2023 and 4.3 per cent in 2024, although for most countries, it will still be higher than pre-pandemic levels.

The IMF's Managing Director, Kristalina Georgieva, warned at the World Government Summit panel hosted by CNBC that “we need to think of the unthinkable as we live in a more shock-prone world impacted by the Covid-19 pandemic, Russia’s invasion of Ukraine and the recent earthquake across Syria and Turkey.”^[0]

Georgieva also expressed concern over public debt levels in the Middle East and North Africa region, pointing out that several economies are facing elevated debt-to-GDP ratios, some close to 90 per cent.^[1] She stressed that governments need to take action to address the issue.^[2]

The IMF further predicted that inflation in the region would surpass 10 per cent – above the global average, while the Gulf Cooperation Council (GCC) countries would contain inflation.^[3]

On the positive side, the United Arab Emirates has introduced a federal corporate tax with a standard statutory rate of 9 per cent, which will come into effect for businesses whose financial year starts on or after June 1 this year.^[4]

The Middle East and North Africa region is forecast to grow by 3.2 per cent this year, following a 5.4 per cent expansion last year, as the Opec+ group of countries sticks to an oil output cut of 2 million barrels per day.^[5]

Georgieva praised Egypt for taking “important steps to avoid financial risks” and emphasized that the fight against inflation remains a priority for world countries in 2023.^[1]

Overall, while global economic growth is slowing down in 2023, the IMF expects it to level out before increasing to 3.1% in 2024. Inflation is projected to be lower in 2023 than in 2022 in nearly 84 per cent of the countries.

0. “‘Think of the unthinkable': IMF chief warns world is a very different place after crises like Covid” CNBC, 14 Feb. 2023, https://www.cnbc.com/2023/02/14/think-of-the-unthinkable-imf-chief-warns-world-is-a-very-different-place-after-crises-like-covid.html

1. “Egypt Takes Critical Steps to Manage Financial Risks: IMF | Sada Elbalad” See, 12 Feb. 2023, https://see.news/egypt-takes-critical-steps-to-manage-financial-risks-imf

2. “IMF raises concern over public debt in MENA nations” MENAFN.COM, 13 Feb. 2023, https://menafn.com/1105565326/IMF-raises-concern-over-public-debt-in-MENA-nations

3. “IMF Says Public Debt in MENA Region is a ‘Concern'” Morocco World News, 12 Feb. 2023, https://www.moroccoworldnews.com/2023/02/354006/imf-says-public-debt-in-mena-region-is-a-concern

4. “IMF Says Gulf Economies Really Are Weaning Themselves Off Oil” Financial Post, 13 Feb. 2023, https://financialpost.com/pmn/business-pmn/imf-says-gulf-economies-really-are-weaning-themselves-off-oil

5. “GCC benefitting from ‘relentless' economic reforms besides high oil prices, IMF chief says” The National, 13 Feb. 2023, https://www.thenationalnews.com/business/economy/2023/02/13/gcc-benefitting-from-relentless-economic-reforms-besides-high-oil-prices-imf-chief-says/