IMF Projects Global Economic Slowdown Until 2023

UNSPLASH/Ibrahim Boran

JAKARTA - The International Monetary Fund (IMF) projects that the global economic slowdown will continue until 2023 in line with the unresolved geopolitical conditions and high world inflationary pressures.

"There are three challenges that affect the slowdown, the conflict in Ukraine, inflationary pressures, and the weakening economy in China," IMF Economic Counselor Pierre-Olivier Gourinchas said at a press conference for the World Economic Outlook (WEO) in Washington DC, Tuesday morning local time, as reported by ANTARA.

In the latest WEO report, the IMF estimates that the global economy will be in the range of 3.2 percent in 2022, and slow to 2.7 percent in 2023, or a decrease of 0.2 percent compared to the outlook in July 2022.

Gourinchas explained that most countries will experience contraction until next year with the largest economies such as the US, European Union, and China will continue the slowing trend.

"In short, the worst is yet to come and for most people, 2023 will feel like a recession," he said.

He said there are a number of mitigation efforts to deal with future global uncertainties, such as strengthening fiscal cushions that have proven useful during the crisis during the pandemic.

Furthermore, according to him, fiscal policy must synergize with monetary policy, especially in overcoming the potential for high global inflation which is estimated to increase until the end of 2022.

"Acting otherwise would hamper efforts to control inflation, present further risks, increase costs and destabilize the financial system," he said.

Then, efforts to overcome the increase in energy prices must be carried out through coordination, so that supply and demand are not disrupted, including providing incentives for people affected by energy prices.

Finally, encouraging efforts to strengthen human resources, digitalization, green energy, and supply chain diversification are very important to make the economy more resilient when a crisis reoccurs at any time.