Global economic growth could slow to around 3.1 per cent in 2023 as monetary policy tightens, the war in Ukraine and the lingering effects of the covid pandemic continue to affect global growth, the International Finance Forum (IFF) ‘Global Finance and Development Report 2023’ predicts.
GDP in China is projected to grow 5.2 per cent in 2023 and slow to five per cent in 2024 as the country rolls out a series of stimulus packages, according to the report released during the IFF 2023 annual meeting.
Looking into the future, it looks likely that the global economy will continue to face strong headwinds. Core inflation in many countries looks set to stay well above central banks’ targets as geopolitical issues including the war in Ukraine could further rock global energy and food markets.
Monetary policy tightening in an effort to rein in inflation could further dampen demand; while geopolitical tensions could further trigger economic slowdown and runaway inflation; the uncertainty of China’s economic growth momentum this year could also have a negative impact on global growth.
The IFF Report now projects global economy will remain weak in 2024 with global GDP expanding 3.1 per cent. It also predicts that global consumer prices will fall to seven per cent this year, down from 9.2 per cent in 2022 and inflation will drop further to 5.8 per cent in 2024.
Monetary policy tightening
The report recommends monetary policy tightening without sacrificing global financial stability consolidating fiscal position while protecting vulnerable groups, accelerating structural reform, and deepening international cooperation and promoting multilateralism.
The IFF report also looks at the global finance market including the US regional bank crisis, US debt ceiling standoff, the impact of policy rates on currency performance and China’s local government and corporate debts.
Vulnerabilities in the financial system in China are unlikely to escalate into systematic risks according to the IFF report. The IFF also looks at China’s green bond markets, carbon markets, as well as global green finance policies. The IFF calls on the international communities to join forces in fighting the climate crisis.
In the report, IFF also provides insight into global digital finance, particularly the application of technologies including big data, blockchain and artificial intelligence.
Released every year during the IFF Annual Meeting, the IFF Global Finance and Development Report offers insights into China’s and global economy as well as the financial markets.