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After years of what the International Money Fund (IMF) calls “powerful blows” to the global economy, modest signs of improvement are expected into 2024. In its April 2023 World Economic Outlook (WEO): A Rocky Recovery, the IMF projects global growth will slope from 3.4% in 2022 to 2.8% in 2023, before bumping up to 3.0% in 2024. Global inflation has begun to recover (albeit more slowly than predicted in January’s WEO Update), and will drop to 7.0% in 2023 and 4.9% in 2024 after hitting 8.7% in 2022.
While many of 2022’s adverse shocks continue, including the war in Ukraine and the threat of COVID-19 outbreaks, the IMF predicts these factors will ease this year and will not affect commodity prices and supply chains as drastically. China’s economy has gained strength since COVID variant outbreaks shut down activity and disrupted supply chains in 2022. The IMF expects this improvement to spill over into countries with strong trade and tourism links to China.
However, the global recovery is tenuous, the IMF notes in their report. The recent failures of a handful of regional banks in the US and the loss of confidence in Credit Suisse have placed the financial sector in a fragile position, the IMF says. Despite central banks’ continuous and synchronous raising of interest rates, the post-pandemic labor market remains tight, and inflation remains “sticky.”
In line with global trends, the IMF predicts 90% of the world’s advanced economies will see declining growth in 2023. Developing economies overall are expected to make a stronger showing, hitting 3.9% growth in 2023 and 4.2% in 2024. However, this growth will vary widely by region, for example, with Latin America and the Caribbean at 1.6% in 2023 and 2.2% in 2024, and China hitting 5.2% in 2023 then dropping to 4.5% in 2024 (owing to an increased standard of living achieved in the country and the corresponding decrease in the rate of change).
As fuel and energy prices have declined from 2022 highs, inflation is expected to fall across the board, but the IMF forecasts target inflation won’t be reached until 2025. “We are therefore entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner,” IMF economist Pierre-Olivier Gourinchas writes in the WEO.
For the analytical instruments industry, this rocky recovery could have spotty effects. The sticker shock stemming from stubborn inflation could force laboratories to cut back on purchasing new instruments. But while the global energy crisis has eased since the first blows of the war in Ukraine, US crude oil production is expected to increase to record highs in 2023, according to the US Energy Information Administration’s April Short-Term Energy Outlook. This growth will continue to drive demand for materials analysis and process analytical instrumentation products.
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