{
  "title": "WEO Update July 2023 Press Briefing Transcript",
  "publication": "IMF News, July 25, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update",
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  "summary": "Press briefing on the World Economic Outlook (WEO) Update by Pierre-Olivier Gourinchas, Economic Counselor and Director of the Research Department - July 25, 2023 at 9:00 a.m. Washington, DC time",
  "publishDate": "2023-07-25",
  "sections": [
    {
      "heading": "Global outlook and key projections",
      "content": "- Global growth will slow from 3.5 percent last year to 3 percent this year; this represents a 0.2 percentage point upward revision for 2023.\n- Advanced economies: growth falls from 2.7 percent last year to 1.5 percent this year.\n- Emerging market and developing economies: growth remains stable at 4 percent this year and 4.1 percent next year.\n- Regional detail highlighted:\n  - Emerging and developing Asia: 5.3 percent growth this year.\n- Global inflation:\n  - Headline inflation projected to decline from 8.7 percent last year to 6.8 percent this year; a 0.2 percentage point downward revision since April.\n  - Core inflation (advanced economies): expected to remain unchanged at 5.1 percent this year and decline to 3.1 percent in 2024.\n- Longer horizon: five-year average growth around about 3 percent, signaling concerns about slowing underlying productivity and weaker prospects for income per capita convergence."
    },
    {
      "heading": "Inflation, monetary policy, and financial conditions",
      "content": "- Monetary tightening has:\n  - Brought interest rates into contractionary territory.\n  - Started to slow credit growth to the nonfinancial sector.\n  - Increased households' and firms' interest payments and pressured real estate markets.\n- Role of monetary policy:\n  - Important in anchoring inflation expectations; without tightening the environment would likely be worse.\n  - Recommendation: avoid easing monetary policy until underlying inflation shows clear signs of sustained cooling.\n  - Central banks should monitor financial stability and stand ready to use other tools as needed.\n- Labor, wages, and profits:\n  - Wage inflation has increased but generally lags price inflation; real wages have declined.\n  - Gap between nominal wage growth and price inflation has started to close.\n  - Firms' profit margins have grown robustly in the last two years, suggesting room to accommodate a rebound in real wages without triggering a wage-price spiral.\n- Financial conditions since March banking stress:\n  - Financial conditions have eased (equity valuations surged, dollar depreciated) but risk of sharp repricing remains if inflation surprises upside or risk appetite deteriorates."
    },
    {
      "heading": "Fiscal policy, debt, and structural reform",
      "content": "- Debt service is increasing as a share of government revenues in both advanced and emerging markets after years of heavy fiscal support and rising interest rates.\n- Recommendation: gradually restore fiscal buffers and put debt dynamics on a more sustainable footing—this is not a call for generalized austerity; pace and composition should consider private demand strength and protect the most vulnerable.\n- Specific fiscal advice:\n  - Phase out energy subsidies where energy prices are back to pre-pandemic levels.\n  - Preserve fiscal space to support structural reforms (labor force participation, education/human capital, investment for green transition).\n- Multilateral cooperation emphasized as critical to manage geoeconomic fragmentation and climate challenges."
    },
    {
      "heading": "Country and regional highlights (selected)",
      "content": "- Argentina:\n  - Revised growth for 2023: -2.5% [NOTE: THIS NUMBER WAS CORRECTED TO -2.5 DURING THE PRESS CONFERENCE].\n  - Projected rebound of growth in 2024 to 3% [NOTE: THIS NUMBER WAS CORRECTED TO 2.8].\n  - Projected inflation: \"at 120 at the end of the year\" (predicated on implementing agreed macroeconomic policies).\n- Brazil:\n  - Growth 2022: 2.9.\n  - Growth 2023: 2.1 (upward revision of 1.2).\n  - Growth 2024: 1.2.\n  - Inflation: headline turned down; core more sticky but expected to converge gradually to target.\n- India:\n  - Growth 2022: 7.2%.\n  - Forecast 2023 growth: 6.1% (0.2 percentage point upside revision).\n  - Forecast 2023 inflation: 4.9% (inside 2 to 6 target band).\n  - India accounts for about 1/6 of total global growth in the year.\n- China:\n  - Chinese inflation revised down by almost 0.9 percentage points to 1.1 percent in 2023.\n  - Forecast 2024 inflation: 1.9 percent.\n  - Subdued core inflation and significant slack (consumption below pre-pandemic trend; youth unemployment above 20 percent).\n- Japan:\n  - Forecast 2023 growth: 1.4 percent.\n  - Inflation has moved above target after long undershooting; monetary policy should remain accommodative but prepare to tighten and consider easing yield curve control.\n- Spain:\n  - Forecast 2023 growth: 2.5 percent (1 percentage point upward revision).\n  - Headline inflation projected at 3.2 percent this year.\n  - Tourism-driven demand has contributed to the upgrade.\n- Germany:\n  - Growth 2022: 1.8.\n  - Forecast 2023: -0.3 (downgrade).\n  - Forecast 2024: 1.3.\n  - Drivers of slowdown: negative real income effects from inflation and euro-area monetary tightening.\n- Egypt:\n  - Growth 2022: 6.7.\n  - Forecast 2023 growth: 3.7 (unchanged from April).\n  - Forecast 2024 growth: 4.1.\n  - Inflation forecast 2023: 24.4 percent; projected to rise to 32 in 2024 (driven by currency depreciation and FX market inflexibility).\n- Sub-Saharan Africa:\n  - Growth slowing from 3.9 to 3.5 percent (2022 to 2023); mild downward revision of 0.1 percentage points.\n  - Climate shocks and extreme events are material macroeconomic risks, exacerbating food insecurity and limiting countries with limited fiscal space."
    },
    {
      "heading": "Risks, scenarios, and policy priorities",
      "content": "- Downside tilt to risks despite moderation of some adverse factors.\n- Main risks:\n  - Persistent core inflation above targets leading to further monetary tightening.\n  - Resurgence of food price pressures (e.g., suspension of Black Sea Grain Initiative could put upward pressure on food prices).\n  - Geoeconomic fragmentation (trade restrictions, redirected FDI, disrupted commodity/critical-mineral supply chains) harming emerging and developing economies.\n  - Climate-related shocks with outsized effects on poorer countries.\n- Policy priorities:\n  - Maintain restrictive monetary policy until underlying inflation is clearly cooling.\n  - Gradual, well-sequenced fiscal consolidation to rebuild buffers while protecting vulnerable groups.\n  - Remove harmful export restrictions and trade measures to avoid exacerbating global volatility.\n  - Advance structural reforms to raise labor force participation, schooling and human capital, and investment (including for the green transition).\n  - Strengthen multilateral cooperation (G20 and other fora) to address fragmentation and coordinate on critical supply chains and climate transition.\n\nTranscript: WEO Update July 2023 Press Briefing Transcript — July 25, 2023\n\n---\n\n\n References\n\n- https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas\n- Arab Republic of Egypt and the IMF\n- Argentina and the IMF\n- Brazil and the IMF\n- Germany and the IMF\n- India and the IMF\n- Japan and the IMF\n- Spain and the IMF\n- Uganda and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update"
    }
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    "Published: July 25, 2023",
    "Global growth will slow from 3.5 percent last year to 3 percent this year; this represents a 0.2 percentage point upward revision for 2023.",
    "Advanced economies: growth falls from 2.7 percent last year to 1.5 percent this year.",
    "Emerging market and developing economies: growth remains stable at 4 percent this year and 4.1 percent next year.",
    "Regional detail highlighted:",
    "Global inflation:",
    "Longer horizon: five-year average growth around about 3 percent, signaling concerns about slowing underlying productivity and weaker prospects for income per capita convergence.",
    "Monetary tightening has:",
    "Role of monetary policy:",
    "Labor, wages, and profits:",
    "Financial conditions since March banking stress:",
    "Debt service is increasing as a share of government revenues in both advanced and emerging markets after years of heavy fiscal support and rising interest rates.",
    "Recommendation: gradually restore fiscal buffers and put debt dynamics on a more sustainable footing—this is not a call for generalized austerity; pace and composition should consider private demand strength and protect the most vulnerable.",
    "Specific fiscal advice:",
    "Multilateral cooperation emphasized as critical to manage geoeconomic fragmentation and climate challenges.",
    "Argentina:",
    "Brazil:",
    "India:",
    "China:",
    "Japan:",
    "Spain:",
    "Germany:",
    "Egypt:",
    "Sub-Saharan Africa:",
    "Downside tilt to risks despite moderation of some adverse factors.",
    "Main risks:",
    "Policy priorities:",
    "[https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas](https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas)",
    "[Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)",
    "[Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)",
    "[Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)",
    "[Germany and the IMF](http://www.imf.org/external/country/DEU/index.htm)",
    "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)",
    "[Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)",
    "[Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)",
    "[Uganda and the IMF](http://www.imf.org/external/country/UGA/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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