IMF: Global economy has 'little margin' for monetary policy error

investmentweek.co.uk:

'Easing prematurely would squander the gains achieved in the past 18 months,' the IMF said.

In its biannual 'Global Economic Outlook' report, the agency said growth had shown «remarkable resilience» in the face of a series of adverse shocks in recent years, with activity slowing but not stalling.

As the global economy continues to recover slowly from the blows of the pandemic, Russia's invasion of Ukraine, and the cost-of-living crisis, the IMF said it is «limping along, not sprinting» due to slow and uneven growth.

In its latest forecasts, global growth is expected to fall from 3.5% in 2022 to 3% this year and 2.9% in 2024. This year's forecast was unchanged from the IMF's previous predictions July, with next year's estimate falling by 0.1 percentage points. Even in 2028, global growth is expected to sit at 3.1%.

UK retail sales growth stunted by higher cost of living

Regionally, the US saw revisions upwards, and is now forecast to grow by 2.1% in 2023 and 1.5% in 2024, up 0.3 and 0.5 percentage points respectively. In contrast, the eurozone is forecast to grow by 0.7% this year and 1.2% next year, down 0.2 and 0.3 percentage points, respectively.

While the UK is no longer forecasted to record the weakest economic growth across the G7 this year, it is expected to do so in 2024. 

Several headwinds had subsided since the IMF's last report in April, such as the end of the Covid-19 global health emergency and easing conditions in the US and Swiss financial sector.

However, it pointed to a further deepening of the real estate crisis in China and the potential for oil prices to surge as key risks for the economy in coming months.

With many countries near the peak of their tightening cycles, the IMF said «little additional