International Monetary Fund (IMF) projected global inflation to decrease from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, still higher than the pre-pandemic levels of about 3.5%.
In the World Economic Outlook report, IMF stated that the risks are still biased towards adverse outcomes but have become less severe since October 2022.
Optimistic scenarios include a more substantial impact from pent-up demand in many economies or a quicker decline in inflation. Adverse outcomes could be hindered recovery due to severe health impacts in China, escalated conflict in Ukraine, and worsening debt due to higher global financing costs.
Amid the cost-of-living crisis in most economies, the focus remains on maintaining sustained disinflation.
However, to ensure financial and debt stability, macroprudential tools must be used, and debt restructuring frameworks strengthened, prioritising accelerating the recovery.
Aid should target those impacted most by rising food and energy prices, and broad-based fiscal relief measures should be discontinued.
Additionally, multilateral solid cooperation is necessary to protect gains from the rules-based multilateral system and tackle climate change by reducing emissions and increasing green investment.
Financial markets may react negatively to inflation news, and geopolitical division could impede economic growth.
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