NEW YORK, Jan 30 (Reuters) – The International Monetary Fund on Monday raised its forecast for output growth in emerging markets for this year, with forecasts now showing that the economic slowdown in the region is likely to ease in 2022. be, on the back of China’s opening. , a resilient India and unexpected growth in Russia.
According to its latest update of the World Economic Outlook, the IMF sees growth in emerging markets and advanced economies at 4.0 percent in 2023, down 0.3 percent from its October projection and 0.1 percent from the 3.9% estimate for 2022 is higher. 2024, the projection is for 4.2% expansion.
Inflation, a recent drag on growth, is seen as high even if it continues to slow this year and next year. Developed and developing economies are seen growing by 9.9% in 2022, then slowing to 8.1% in 2023 and 5.5% in 2024, still on an average of 4.9% in 2017-2019.
About 15% of low-income countries are estimated to already be in debt distress and more than 45% are at risk of getting there, with 1-in-4 emerging market economies also at high risk.
Leading the growth charge in 2023, India is expected to grow by 6% this year and next, while China’s upward revision of 0.8% will lead to growth of 5% this year.
Pierre-Olivier Gourinchas, chief economist and director of research at the IMF, said: “If we look at both China and India together, they account for 50% of global growth in 2023… so a very important contribution.”
Russia, on the other hand, has seen a 2.6 percent increase in growth forecast for 2023, which translates to a 0.3 percent increase this year. It is the largest positive change among the largest economies.
Russia’s revisions are largely due to last year’s “sufficiently high” export earnings, as well as strong fiscal stimulus from Moscow, partly due to military spending. However, in the medium term, there is still a large decrease in production forecast for Russia and related to its occupation of Ukraine.
Petya Koeva-Brooks, deputy director, said, “If you look at (2027) as the medium term and you compare that level to pre-war, the difference is about 9% of GDP, so it’s still very important.” from the IMF’s research department.
Growth in the economies of the Middle East and Central Asia is slowing this year to 3.2%, 0.4% less than the October estimate, partly due to the effects of the war in Europe.
The regional variation mainly “shows reductions in both Egypt and Saudi Arabia, and this is due to the impact of the war in Ukraine and the impact it had on commodity prices,” Gourinchas said. Regarding Saudi Arabia, he added, the reduction in crude oil production as part of the OPEC plus agreement was also severe.
“The situation is very difficult for oil exporters in the region and many of them are in debt, so the still high food prices and energy prices are a big burden,” said Koeva-Brooks. “The cost of living crisis is alive in that region, so there is a risk of social unrest.”
Brazil and Mexico, Latin America’s largest economies, were both revised down by 0.2 and 0.5 percentage points, respectively, in economic growth in 2023. For Latam and the Caribbean, the overall increase in growth estimates was only 0.1 percent, from 1.8 percent.
Despite the expectation of rapid growth in the coming years for EM, taken individually, according to the IMF, around half of these economies have lower growth forecasts in 2023 than their 2022 estimate.
The estimate comes on the back of a slight uptick in the global growth outlook for 2023 driven by “surprisingly resilient” demand in the US and Europe, easing energy costs and the reopening of China’s economy after Beijing eased its strict COVID-19 restrictions. . . read more
Among the downside risks to the forecast are the suspension of the Chinese economic recovery, and an escalation of the war in Ukraine, which could also exacerbate inflation, the IMF said.
Reporting by Rodrigo Campos in New York Additional reporting by David Lawder in Washington Editing by Matthew Lewis
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