## WEO Update July 2023 Press Briefing Transcript _IMF News, July 25, 2023_ ## Source details **Canonical URL:** [WEO Update July 2023 Press Briefing Transcript](https://www.imf.org/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update) ## Other formats - [Markdown version](/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update/index.md) - [Structured JSON version](/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update/index.json) - [Bundle manifest](/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update/bundle-manifest.json) ## Bibliographic details - Published: July 25, 2023 --- ### Global outlook and key projections - 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: - Emerging and developing Asia: 5.3 percent growth this year. - Global inflation: - 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. - Core inflation (advanced economies): expected to remain unchanged at 5.1 percent this year and decline to 3.1 percent in 2024. - Longer horizon: five-year average growth around about 3 percent, signaling concerns about slowing underlying productivity and weaker prospects for income per capita convergence. ### Inflation, monetary policy, and financial conditions - Monetary tightening has: - Brought interest rates into contractionary territory. - Started to slow credit growth to the nonfinancial sector. - Increased households' and firms' interest payments and pressured real estate markets. - Role of monetary policy: - Important in anchoring inflation expectations; without tightening the environment would likely be worse. - Recommendation: avoid easing monetary policy until underlying inflation shows clear signs of sustained cooling. - Central banks should monitor financial stability and stand ready to use other tools as needed. - Labor, wages, and profits: - Wage inflation has increased but generally lags price inflation; real wages have declined. - Gap between nominal wage growth and price inflation has started to close. - 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. - Financial conditions since March banking stress: - Financial conditions have eased (equity valuations surged, dollar depreciated) but risk of sharp repricing remains if inflation surprises upside or risk appetite deteriorates. ### Fiscal policy, debt, and structural reform - 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: - Phase out energy subsidies where energy prices are back to pre-pandemic levels. - Preserve fiscal space to support structural reforms (labor force participation, education/human capital, investment for green transition). - Multilateral cooperation emphasized as critical to manage geoeconomic fragmentation and climate challenges. ### Country and regional highlights (selected) - Argentina: - Revised growth for 2023: -2.5% [NOTE: THIS NUMBER WAS CORRECTED TO -2.5 DURING THE PRESS CONFERENCE]. - Projected rebound of growth in 2024 to 3% [NOTE: THIS NUMBER WAS CORRECTED TO 2.8]. - Projected inflation: "at 120 at the end of the year" (predicated on implementing agreed macroeconomic policies). - Brazil: - Growth 2022: 2.9. - Growth 2023: 2.1 (upward revision of 1.2). - Growth 2024: 1.2. - Inflation: headline turned down; core more sticky but expected to converge gradually to target. - India: - Growth 2022: 7.2%. - Forecast 2023 growth: 6.1% (0.2 percentage point upside revision). - Forecast 2023 inflation: 4.9% (inside 2 to 6 target band). - India accounts for about 1/6 of total global growth in the year. - China: - Chinese inflation revised down by almost 0.9 percentage points to 1.1 percent in 2023. - Forecast 2024 inflation: 1.9 percent. - Subdued core inflation and significant slack (consumption below pre-pandemic trend; youth unemployment above 20 percent). - Japan: - Forecast 2023 growth: 1.4 percent. - Inflation has moved above target after long undershooting; monetary policy should remain accommodative but prepare to tighten and consider easing yield curve control. - Spain: - Forecast 2023 growth: 2.5 percent (1 percentage point upward revision). - Headline inflation projected at 3.2 percent this year. - Tourism-driven demand has contributed to the upgrade. - Germany: - Growth 2022: 1.8. - Forecast 2023: -0.3 (downgrade). - Forecast 2024: 1.3. - Drivers of slowdown: negative real income effects from inflation and euro-area monetary tightening. - Egypt: - Growth 2022: 6.7. - Forecast 2023 growth: 3.7 (unchanged from April). - Forecast 2024 growth: 4.1. - Inflation forecast 2023: 24.4 percent; projected to rise to 32 in 2024 (driven by currency depreciation and FX market inflexibility). - Sub-Saharan Africa: - Growth slowing from 3.9 to 3.5 percent (2022 to 2023); mild downward revision of 0.1 percentage points. - Climate shocks and extreme events are material macroeconomic risks, exacerbating food insecurity and limiting countries with limited fiscal space. ### Risks, scenarios, and policy priorities - Downside tilt to risks despite moderation of some adverse factors. - Main risks: - Persistent core inflation above targets leading to further monetary tightening. - Resurgence of food price pressures (e.g., suspension of Black Sea Grain Initiative could put upward pressure on food prices). - Geoeconomic fragmentation (trade restrictions, redirected FDI, disrupted commodity/critical-mineral supply chains) harming emerging and developing economies. - Climate-related shocks with outsized effects on poorer countries. - Policy priorities: - Maintain restrictive monetary policy until underlying inflation is clearly cooling. - Gradual, well-sequenced fiscal consolidation to rebuild buffers while protecting vulnerable groups. - Remove harmful export restrictions and trade measures to avoid exacerbating global volatility. - Advance structural reforms to raise labor force participation, schooling and human capital, and investment (including for the green transition). - Strengthen multilateral cooperation (G20 and other fora) to address fragmentation and coordinate on critical supply chains and climate transition. _Transcript: WEO Update July 2023 Press Briefing Transcript — July 25, 2023_ --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2023/07/25/tr072523-transcript-of-world-economic-outlook-update_