The IMF published its latest World Economic Outlook yesterday, with its revised global and regional forecasts. The global growth projection for 2023 was unchanged at 3.0%, but 2024 was revised down to 2.9%, from 3.0% previously, as the effect of outsized cumulative rate hikes start to take a more meaningful effect. The downgrade was driven by emerging market and developing economies being revised down from 4.1% to 4.0%, while advanced economies were unchanged at 1.4% next year. China’s growth forecast for next year has been revised down from 4.5% to 4.2%, while the US has been revised up from 1.0% to 1.5%. In terms of inflation, global price growth is projected to average 6.9% this year and 5.8% in 2024. With lower commodity prices expected to contribute to this, core inflation is projected to decline at a slower pace.
The IMF’s economic counsellor, Pierre-Olivier Gourinchas, told reporters at the launch event for the WEO yesterday that the Fund expected that the Bank of England would need to raise rates one more time, and to keep them elevated for a period as inflation has remained persistent despite a cooling growth outlook.
Egypt’s headline CPI inflation rose to a new record high of 38.0% y/y in September, up from the previous record of 37.4% recorded in August. The acceleration was driven by a 73.6% y/y rise in the cost of food and beverages, the largest component of the basket. On a monthly basis, headline inflation was up 2.0%, accelerating from 1.6% on the previous reading and reversing two months of disinflation. Some annualised pressures should soften as October 2022’s devaluation passes through the base, and government plans announced this week to reduce prices on seven key commodities by 15%-25% including the staple fava beans and rice will also help in the coming months. However, a potential further move lower by the EGP as pressures on the currency remain would keep inflation meaningful.