The International Monetary Fund said most countries would avoid a recession in 2023, but again forecast some of the slowest global growth in decades. "Inflation's return to target is unlikely before 2025," it said.
The International Monetary Fund (IMF) on Tuesday warned that financial turmoil in 2023 could limit economic growth.
"Serious financial stability-related downside risks have emerged," IMF chief economist Pierre-Oliver Gourinchas told a press conference on Tuesday.
The organization predicted that most countries would avoid a recession this year despite the volatility.
The IMF is launching spring meetings alongside the World Bank this week in Washington.
"A rocky recovery" was the name given to the April 2023 edition of its quarterly World Economic Outlook published on Tuesday.
The IMF is forecasting global real GDP growth at 2.8% for 2023 and 3.0% for 2024, down from 3.4% in 2022. This is one percentage point less than the estimates made by the Fund in January.
The organization changed its forecast due to weaker performances in some large economies and expected monetary tightening as a reaction to inflation.
IMF managing director Kristalina Georgieva said in a speech last week that the medium-term growth forecasts were flatter than they had been since the 1990s.
As usual, growth in developed economies was predicted to be lower than in developing markets.
It forecast headline inflation of 7.0% this year, down from 8.7%, and predicted a further dip to 4.9% globally in 2024.
"Inflation's return to target is unlikely before 2025 in most cases," it said. Most countries target inflation in the region of 2%. Gourinchas also warned that the figures were flattering and that core underlying inflation, more directly felt by consumers, was generally higher.
"Monetary policy needs to stay focused on price stability," Gourinchas said, seemingly encouraging central banks not to dip interest rates too soon.
"The global economy remains on track for a gradual recovery from the pandemic and Russia's war in Ukraine," the IMF's chief economist said, adding that increasing interest rates and reduced money printing by the world's central banks had had a dampening effect on inflation.