Economic Growth

IMF warns of weakest medium-term global growth outlook in 30 years, and other economy stories you need to read this week

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Top economy stories: IMF says medium-term growth outlook weakest in 30 years; US inflation slows to lowest level in nearly two years; and more.

Top economy stories: IMF says medium-term growth outlook weakest in 30 years; US inflation slows to lowest level in nearly two years; and more. Image: REUTERS/Toby Melville

Gabi Thesing
Senior Writer, Forum Agenda

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  • This weekly round-up brings you the latest stories from the world of economics and finance.
  • Top economy stories: IMF says medium-term growth outlook weakest in 30 years; US inflation slows to lowest level in nearly two years; Wages in Japan not keeping up with rising prices.

1. IMF warns medium-term growth outlook weakest in 30 years

The global economy is heading for its weakest medium-term growth in more than 30 years as the world grapples with geopolitical fragmentation, slower labour force growth and weaker prospects for previously fast-growing economies such as China, the International Monetary Fund (IMF) warns in its latest World Economic Outlook.

It expects global growth to be around 3% in 2028 – the lowest medium-term forecast in an IMF report since 1990.

“The world economy is not currently expected to return over the medium term to the rates of growth that prevailed before the pandemic,” the IMF says.

A graphic showing growth projections for different economies from 2022 to 2024.
The IMF has trimmed its 2023 global growth outlook. Image: IMF.

Rising geopolitical tensions from issues such as the war in Ukraine and Brexit are leading to a fragmentation of the global economy that could increase financial stability risks, the report adds. This could hit cross-border investments, asset prices, payment systems and banks' ability to lend.

The IMF has long warned of increased costs, economic friction and GDP output losses associated with the global economy fragmenting into geopolitical blocs.

The agency has also trimmed its 2023 global growth outlook slightly, as higher interest rates cool economic activity. It now forecasts global real GDP growth at 2.8% for 2023 and 3.0% for 2024, marking a slowdown from 3.4% growth in 2022.

2. US inflation slows to lowest level in nearly two years, jobless claims increase

US inflation eased last month to its lowest in nearly two years, but stubbornly high rents kept underlying inflation pressures simmering, likely ensuring that the Federal Reserve will raise interest rates again next month.

Prices rose 5% in the 12 months to March, according to data published by the Bureau of Labor Statistics, down from 6% in February. That’s the ninth consecutive monthly drop in annual inflation and puts it at its lowest level since May 2021, although it is still more than twice the Fed’s 2% inflation target.

A bar chart showing 12 month change in prices across different categories, March 2023.
US annual inflation has dropped for the ninth month in a row. Image: US Bureau of Labor Statistics.

"The bottom line is that inflation still remains too hot for the Fed's liking," Sarah House, a senior economist at Wells Fargo, told Reuters. "That said, there are forward-looking signs that suggest inflation will slow further in the coming months."

In an indication that higher borrowing costs are already slowing demand in the economy, the number of Americans filing new claims for unemployment benefits increased more than expected last week.

Initial claims for state unemployment benefits rose by 11,000 to a seasonally adjusted 239,000 for the week ended 8 April. Economists polled by Reuters had forecast 232,000 claims for the week.

3. News in brief: Stories on the economy from around the world

Wages in Japan are not keeping up with rising prices, declining by 2.6% in February from a year earlier when adjusted for inflation, according to government data. That’s the 11th straight decline and is putting pressure on the central bank’s new governor to end Japan’s ultra-loose monetary policy amid inflation of 3.1%. But new deputy governor Shinichi Uchida says the Bank of Japan will continue monetary easing to achieve its 2% inflation target.

Ukraine's GDP fell by 29.1% in 2022 as Russia's full-scale invasion battered the economy. The figure is slightly better than the 30% drop forecast by the government. Russia’s war on Ukraine has damaged heavy industry, the power grid and the agriculture sector, and resulted in the loss of swathes of land in the south and east.


Faster economic growth in Asia this year will be driven by China’s recovery from the pandemic and strong demand in India, according to the Asian Development Bank (ADB). The region’s economy will expand by 4.8% this year and next, up from 4.2% in 2022, according to the ADB’s latest forecasts.

The European Commission is drawing up new plans to better protect taxpayers from bank failure, The Financial Times reports. Draft legislation outlines rules to make it easier to transfer depositors’ cash to healthy institutions from banks facing troubles, or to close down a bank without having to plough in taxpayers’ money.


How is the World Economic Forum ensuring sustainable global markets?

Britain's economy stagnated in February as strikes by public-sector workers hit output, but a bounce in January was stronger than first thought, reducing the risk of a first-quarter recession. Economic output was flat in month-on-month terms in February, but the Office for National Statistics has revised up its estimate for January's growth to 0.4% from 0.3%.

A number of Sub-Saharan African countries are facing another debt repayment crisis because of soaring food prices, according to Moody’s Investors Services. Several countries will need to repay record amounts of debt from this year through to 2025. The UN estimates that more than a quarter of a billion people in the continent are experiencing hunger.

4. More on finance and the economy on Agenda

Discussions and action plans at the IMF and World Bank Spring Meetings converged on a single goal – financing an energy transition that is equitable for emerging markets and fast enough to maintain the Paris Agreement goals. Investment of $4 trillion to $6 trillion annually is needed by 2030 to meet these twin goals, but we are currently only in the hundreds of billions.

Many European countries are creating favourable environments for fast-growing technology companies through investment plans and funding programs. This blog looks at how the right mix of regulatory, taxation, education and funding policies can foster econmic growth.

The global economy is entering a period of permanently higher inflation fuelled by four deeper forces, according to an economics lecturer. These forces are deglobalization, climate change, a wage-price spiral and highly liquid global markets.

Related topics:
Economic GrowthGeo-Economics and PoliticsFinancial and Monetary Systems
1. IMF warns medium-term growth outlook weakest in 30 years2. US inflation slows to lowest level in nearly two years, jobless claims increase 3. News in brief: Stories on the economy from around the world4. More on finance and the economy on Agenda

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