MARRAKECH, Morocco: The International Monetary Fund (IMF) has revised its growth projections, highlighting challenges facing the global economy, including uncertainties surrounding China and the eurozone, despite the resilience of the U.S. economy.

In its latest World Economic Outlook, the IMF maintained its 2023 global real GDP growth forecast at 3.0 percent but reduced its 2024 forecast from 3.0 percent to 2.9 percent, down from 3.5 percent in 2022.

The IMF’s chief economist, Pierre-Olivier Gourinchas, noted that while the global economy was recovering from COVID-19, the Russia-Ukraine conflict, and last year’s energy crisis, divergent growth patterns indicated “mediocre” prospects in the medium term.

Diverse risks loom, including concerns about China’s property crisis, volatile commodity prices, geopolitical fragmentation, and a resurgence of inflation. The recent Israel-Palestinian conflict added another layer of uncertainty, impacting oil prices and potentially global output.

Gourinchas said, “Depending how the situation might unfold, there are many very different scenarios that we have not even yet started to explore, so we cannot make any assessment at this point yet.”

Research from the IMF indicated that a 10 percent rise in oil prices could dampen global output by approximately 0.2 percent in the following year and boost global inflation by around 0.4 percent.

Despite ongoing challenges, the global economy demonstrates resilience but is far from a robust recovery. The pandemic, Ukraine war, geopolitical tensions, rising interest rates, extreme weather events, and reduced fiscal support continue to hinder stronger growth.

Medium-term prospects appear dimmer, particularly for emerging economies, which face slower improvements in living standards and increasing debt concerns.

Inflation remains high, although it is expected to decrease to an average of 6.9 percent in 2023 and 5.8 percent in 2024. Core inflation, excluding food and energy, is projected to decrease gradually, reflecting tight labor markets and persistent services inflation.

“Inflation remains uncomfortably high,” Gourinchas said, warning, “Central banks … must avoid a premature easing.”

While unemployment rates remain low in advanced economies, there is limited evidence of a wage-price inflation spiral.

The IMF noted that investment levels remained lower than pre-pandemic levels, with businesses displaying caution due to higher interest rates, stricter lending conditions, and reduced fiscal support.

The IMF’s recommendations include building fiscal buffers against future shocks. It also expressed concern about the substantial deterioration of fiscal deficits in the United States.

In contrast, the United States is expected to outperform pre-pandemic forecasts, with the IMF raising its growth projections for the country.

China’s growth outlook is less optimistic, facing challenges from a property crisis and weak external demand. A deepening real estate crisis could significantly impact China’s growth and have global repercussions.

The IMF revised down growth forecasts for the eurozone and the UK, citing high energy prices.

Japan’s growth prospects improved, with expectations of a 2.0 percent growth rate in 2023, driven by pent-up demand, tourism, accommodative monetary policy, and increased auto exports.