THE International Monetary Fund on Monday raised its estimate of production growth in the emerging markets for this year, with projections now showing that the economic slowdown in the region may have bottomed out in 2022 due to the reopening of Chinaan India resilient and unexpected growth in Russia.
In its most recent update to the Global Economic Outlook report, the IMF sees growth in emerging markets and developing economies at 4% in 2023, 0.3 percentage points above the October projection and 0.1 percentage points above the 3.9% estimate for 2022. For 2024, the projection is expansion of 4.2%.
Inflation, a recent drag on growth, is considered high, although it will continue to slow this year and next.
Emerging and developing economies are expected to have registered price increases of 9.9% in 2022, slowing down to 8.1% in 2023 and 5.5% in 2024, still above the average of 4.9% in the period from 2017 to 2019.
Leading the growth rate in 2023, the forecast for India remains over 6% this year and next, while China’s upward revision by 0.8 percentage points puts it on track for growth above 5% this year.
“If you look at China and India together, they account for around 50% of world growth in 2023…so a very significant contribution,” said Pierre-Olivier Gourinchas, chief economist and director of the IMF’s research department.
Russia, on the other hand, registered an increase of 2.6 percentage points in the growth projection for 2023, which translates into an expansion estimate of 0.3% this year. It is by far the largest positive review among major economies.
The revisions for Russia are mainly due to “fairly high” export earnings last year, as well as strong fiscal stimulus from Moscow, partly on military spending. As I understand it, in the medium term, there is still a sharp drop in production forecast for Russia linked to the invasion of Ukraine.
The expectations for 2023 of Brazil and Mexicothe largest economies in Latin America, were revised upwards by 0.2 and 0.5 percentage points, respectively. For Latin America and the Caribbean, the overall increase in the growth estimate was just 0.1 percentage point to 1.8%.
Despite the expectation of faster growth in the coming years for emerging markets, when considered individually about half of these economies have growth projections in 2023 lower than the estimate for 2022, according to the IMF.
The estimates come against the backdrop of a slight increase in global growth prospects for 2023, aided by “surprisingly resilient” demand in the US and Europe, a reduction in energy costs and the reopening of the economy from China after Beijing abandoned its strict restrictions against Covid-19.
Source: Moneytimes
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