IMF Lowers 2023 Economic Growth Forecast Amid Inflation, Bank Troubles

The International Monetary Fund lowered its 2023 global growth forecast on Tuesday, warning that financial volatility and persistent inflation had raised the risk of a “hard landing” for the world economy. 

The Details: The IMF predicted global productivity would grow 2.3% in 2023 — one percentage point less than it previously predicted in January. An executive summary of the report said “lower food and energy prices and improved supply-chain functioning,” combined with “recent financial sector turmoil,” contributed to a “rocky” economic recovery. In the aftermath of Silicon Valley Bank’s collapse, the IMF said, “Uncertainty is high and the balance of risks has shifted firmly to the downside so long as the financial sector remains unsettled.” The IMF also predicted that interest rates, raised by central banks like the U.S. Federal Reserve to fight inflation, would come down once inflation subsided. 

For Context: Some predictions of a recessionary “hard landing” in 2023 were replaced with hopes for a “soft landing” when strong GDP figures were released early this year. However, persistent inflation and the collapse of Silicon Valley Bank have since cast doubt on that outlook. Some disagreement remains, however; on Monday, the World Bank raised its growth forecast from 1.7% to 2%. 

How the Media Covered It: Coverage was widespread in business outlets, most of which are rated Center or Lean Left. Some coverage from the right and center labeled the IMF as a “Washington-based institution.”