## World Economic Outlook, April 2023: A Rocky Recovery _World Economic Outlook, April 2023_ ## Source details **Canonical URL:** [World Economic Outlook, April 2023: A Rocky Recovery](https://www.imf.org/en/publications/weo/issues/2023/04/11/world-economic-outlook-april-2023) ## Other formats - [Markdown version](/en/publications/weo/issues/2023/04/11/world-economic-outlook-april-2023/index.md) - [Structured JSON version](/en/publications/weo/issues/2023/04/11/world-economic-outlook-april-2023/index.json) - [Bundle manifest](/en/publications/weo/issues/2023/04/11/world-economic-outlook-april-2023/bundle-manifest.json) ## Bibliographic details - Published: April 11, 2023 --- ### Global outlook and baseline projections - Baseline forecast: global growth falls from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. - Advanced economies: growth slowdown from 2.7 percent in 2022 to 1.3 percent in 2023. - Global headline inflation in the baseline: falls from 8.7 percent in 2022 to 7.0 percent in 2023, driven by lower commodity prices. - Underlying (core) inflation: likely to decline more slowly than headline inflation. - Inflation’s return to target: "unlikely before 2025 in most cases." - Outlook characterization: "uncertain again amid financial sector turmoil, high inflation, ongoing effects of Russia’s invasion of Ukraine, and three years of COVID." ### Alternative scenario and downside risks - Plausible alternative scenario with further financial sector stress: - Global growth declines to about 2.5 percent in 2023. - Advanced economy growth falls below 1 percent. - Risks to the outlook: "heavily skewed to the downside, with the chances of a hard landing having risen sharply." - Financial sector developments: "banking sector vulnerabilities have come into focus and fears of contagion have risen across the broader financial sector, including nonbank financial institutions." ### Major thematic chapters and their key findings - Chapter 1: Global Prospects and Policies - Tentative signs of a soft landing in early 2023 receded amid stubbornly high inflation and recent financial sector turmoil. - Inflation has declined as central banks raised interest rates and food and energy prices fell, but underlying price pressures remain sticky with tight labor markets in a number of economies. - Side effects from the fast rise in policy rates are becoming apparent through banking sector vulnerabilities. - Chapter 2: The Natural Rate of Interest: Drivers and Implications for Policy - The natural rate of interest is "the real interest rate that neither stimulates nor contracts the economy" and is a reference for monetary policy stance and public debt sustainability. - Chapter 2 studies the evolution of the natural rate across several large advanced and emerging market economies using complementary approaches to mitigate estimation uncertainty. - Overall analysis suggests that once the current inflationary episode has passed, interest rates are likely to revert toward pre-pandemic levels in advanced economies. - Future convergence to pre-pandemic levels depends on whether scenarios with persistently higher government debt and deficit or financial fragmentation materialize. - Chapter 3: Coming Down to Earth: How to Tackle Soaring Public Debt - Public debt as a ratio to GDP "soared across the world during COVID-19 and is expected to remain elevated," posing a growing challenge as real interest rates rise. - Three main conclusions: - Adequately timed and appropriately designed fiscal consolidations have a high probability of durably reducing debt ratios. - When a country is in debt distress, a comprehensive approach combining significant debt restructuring, fiscal consolidation, and policies to support economic growth can have a significant and long-lasting impact on reducing debt ratios; coordination among creditors is essential. - Economic growth and inflation have historically contributed to reducing debt ratios. - Chapter 4: Geoeconomic Fragmentation and Foreign Direct Investment - Supply-chain disruptions and rising geopolitical tensions center the policy debate on the risks, benefits, and costs of geoeconomic fragmentation. - FDI flows are increasingly concentrated among geopolitically aligned countries, particularly in strategic sectors. - Several emerging market and developing economies are highly vulnerable to FDI relocation due to reliance on FDI from geopolitically distant countries. - Long-term impact: FDI fragmentation from the emergence of geopolitical blocs can generate large output losses, especially for emerging market and developing economies. - Policy implication: "Multilateral efforts to preserve global integration are the best way to reduce the large and widespread economic costs of FDI fragmentation." ### Policy implications and priorities - Monetary policy: - Use the natural rate of interest as a reference to gauge policy stance. - Recognize that interest rates are likely to revert toward pre-pandemic levels once the inflationary episode passes, conditional on fiscal and financial scenarios. - Fiscal policy and debt management: - Pursue adequately timed and appropriately designed fiscal consolidations to durably reduce debt ratios. - In debt distress, combine debt restructuring, fiscal consolidation, and growth-supportive policies with creditor coordination. - Multilateral and geopolitical policy: - Prioritize multilateral efforts to preserve global integration to mitigate large output losses from FDI fragmentation. - Financial stability: - Monitor banking sector vulnerabilities and contagion risks across nonbank financial institutions amid rapid policy rate hikes. *Source: World Economic Outlook, April 2023: A Rocky Recovery* --- ## Content in this bundle - **weoapr2023-ch2** - [weoapr2023-ch2 (XLSX)](/-/media/files/publications/weo/2023/april/data/weoapr2023-ch2.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"} - **WEO Chapter 3 Apr 2023** - [WEO Chapter 3 Apr 2023 (XLSX)](/-/media/files/publications/weo/2023/april/data/weoapr2023-ch3.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"} - **dataset overview** - [dataset overview (XLSX)](/-/media/files/publications/weo/2023/april/data/weoapr2023-ch4.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"} - **Chapter 1** - [Chapter 1 (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch1.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 1 (PDF)](/-/media/files/publications/weo/2023/april/english/ch1.pdf){rel="external" type="application/pdf"} - **Chapter 1 Annex** - [Chapter 1 Annex (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch1annex.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 1 Annex (PDF)](/-/media/files/publications/weo/2023/april/english/ch1annex.pdf){rel="external" type="application/pdf"} - **Chapter 2** - [Chapter 2 (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch2.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 2 (PDF)](/-/media/files/publications/weo/2023/april/english/ch2.pdf){rel="external" type="application/pdf"} - **Chapter 2 Annex** - [Chapter 2 Annex (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch2annex.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 2 Annex (PDF)](/-/media/files/publications/weo/2023/april/english/ch2annex.pdf){rel="external" type="application/pdf"} - **CHAPTER 3 COMINg DOWN TO EARTh: hOW TO T ACKLE SOARINg PUbLIC DEbT** - [CHAPTER 3 COMINg DOWN TO EARTh: hOW TO T ACKLE SOARINg PUbLIC DEbT (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch3.pdf.md){rel="alternate" type="text/markdown"} - [CHAPTER 3 COMINg DOWN TO EARTh: hOW TO T ACKLE SOARINg PUbLIC DEbT (PDF)](/-/media/files/publications/weo/2023/april/english/ch3.pdf){rel="external" type="application/pdf"} - **Chapter 3 Annex** - [Chapter 3 Annex (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch3annex.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 3 Annex (PDF)](/-/media/files/publications/weo/2023/april/english/ch3annex.pdf){rel="external" type="application/pdf"} - **Chapter 4** - [Chapter 4 (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch4.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 4 (PDF)](/-/media/files/publications/weo/2023/april/english/ch4.pdf){rel="external" type="application/pdf"} - **Chapter 4 Annex** - [Chapter 4 Annex (Markdown version)](/-/media/files/publications/weo/2023/april/english/ch4annex.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 4 Annex (PDF)](/-/media/files/publications/weo/2023/april/english/ch4annex.pdf){rel="external" type="application/pdf"} - **Executive Summary** - [Executive Summary (Markdown version)](/-/media/files/publications/weo/2023/april/english/execsum.pdf.md){rel="alternate" type="text/markdown"} - [Executive Summary (PDF)](/-/media/files/publications/weo/2023/april/english/execsum.pdf){rel="external" type="application/pdf"} - **Foreword** - [Foreword (Markdown version)](/-/media/files/publications/weo/2023/april/english/foreword.pdf.md){rel="alternate" type="text/markdown"} - [Foreword (PDF)](/-/media/files/publications/weo/2023/april/english/foreword.pdf){rel="external" type="application/pdf"} - **Statistical Appendix** - [Statistical Appendix (Markdown version)](/-/media/files/publications/weo/2023/april/english/statsappendix.pdf.md){rel="alternate" type="text/markdown"} - [Statistical Appendix (PDF)](/-/media/files/publications/weo/2023/april/english/statsappendix.pdf){rel="external" type="application/pdf"} - **Table a1** - [Table a1 (Markdown version)](/-/media/files/publications/weo/2023/april/english/tablea1.pdf.md){rel="alternate" type="text/markdown"} - [Table a1 (PDF)](/-/media/files/publications/weo/2023/april/english/tablea1.pdf){rel="external" type="application/pdf"} - **Table b1** - [Table b1 (Markdown version)](/-/media/files/publications/weo/2023/april/english/tableb1.pdf.md){rel="alternate" type="text/markdown"} - [Table b1 (PDF)](/-/media/files/publications/weo/2023/april/english/tableb1.pdf){rel="external" type="application/pdf"} - **Full Report** - [Full Report (Markdown version)](/-/media/files/publications/weo/2023/april/english/text.pdf.md){rel="alternate" type="text/markdown"} - [Full Report (PDF)](/-/media/files/publications/weo/2023/april/english/text.pdf){rel="external" type="application/pdf"} - **World Economic Outlook: A rocky recovery; Chapter 1: Global prospects and policies; April 2023, IMF** - [World Economic Outlook: A rocky recovery; Chapter 1: Global prospects and policies; April 2023, IMF (Markdown version)](/-/media/files/research/commodityprices/weospecialfeature/csfapril2023.pdf.md){rel="alternate" type="text/markdown"} - [World Economic Outlook: A rocky recovery; Chapter 1: Global prospects and policies; April 2023, IMF (PDF)](/-/media/files/research/commodityprices/weospecialfeature/csfapril2023.pdf){rel="external" type="application/pdf"} --- ## References - [DataMapper](https://www.imf.org/external/datamapper/datasets/WEO) - [Blog by Pierre-Olivier Gourinchas](https://www.imf.org/en/blogs/articles/2023/04/11/global-economic-recovery-endures-but-the-road-is-getting-rocky) - [April 2023 Database](https://www.imf.org/en/publications/weo/weo-database/2023/april) - [Press Conference](https://www.imf.org/en/Videos/view?vid=6324483852112) - [Trancript](https://www.imf.org/en/News/Articles/2023/04/12/tr41123-weo-press-briefing-transcript) - [Chart of the Week](https://www.imf.org/en/Blogs/Articles/2023/04/19/world-economic-outlook-shows-economies-facing-high-uncertainty) - [chapter 1 data](https://www.imf.org/-/media/files/publications/weo/2023/april/data/weoapril2023-ch1.zip) - [https://www.imf.org/en/blogs/articles/2023/04/10/interest-rates-likely-to-return-towards-pre-pandemic-levels-when-inflation-is-tamed](https://www.imf.org/en/blogs/articles/2023/04/10/interest-rates-likely-to-return-towards-pre-pandemic-levels-when-inflation-is-tamed) - [https://www.imf.org/en/blogs/articles/2023/04/10/how-to-tackle-soaring-public-debt](https://www.imf.org/en/blogs/articles/2023/04/10/how-to-tackle-soaring-public-debt) - [https://www.imf.org/en/blogs/articles/2023/04/05/fragmenting-foreign-direct-investment-hits-emerging-economies-hardest](https://www.imf.org/en/blogs/articles/2023/04/05/fragmenting-foreign-direct-investment-hits-emerging-economies-hardest) - [Watch Event Replay](https://www.imf.org/en/Videos/view?vid=6324142584112) _Source: https://www.imf.org/en/publications/weo/issues/2023/04/11/world-economic-outlook-april-2023_