The latest forecasts from the International Monetary Fund (IMF) give a reasonably upbeat assessment for the world economy – at least in the context of what has happened over the past couple of years. Battered first by Covid-19 and then by the cost-of-living crisis, the IMF predicts that a “soft-landing” is now in prospect for the international economy .
Its forecast for global growth of 3.1 per cent this year is a small increase on its previous prediction, though growth in the main industrialised economies will be slower. In the euro zone, in particular, separate official figures published on Tuesday showed that the economy is effectively flat, with stronger than expected growth in Southern Europe offset by ongoing weakness further north, particularly in Germany, where investment has fallen.
Elsewhere the US economy has held up better than expected and China is still growing , albeit more slowly. The IMF says that governments need to start to prepare to return their economies to growth as conditions improve, but its report also points to the significant geo-political uncertainties which are occupying policymakers and may themselves have a wider economic impact. In this context the threat of wider conflict in the Middle East is just one of the dangers.
To some extent the last couple of years have increased the doubts about the value of such all-encompassing forecasts. Yet policymakers do need some kind of road-map, even if it is a best guess, and the IMF report is not short of insight, for example om how spending on the war may be boosting growth in Russia, despite the sanctions.
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For Ireland, the prospect of calmer international waters is welcome, even if the lacklustre outlook may slow growth here. Ireland has outperformed in recent years largely due to a huge influx of foreign investment. While there is no sign of this drying up, inward investment may be slowing as the markets multinationals are selling into are growing more slowly. After a few years when everything appeared to be in Ireland’s favour, the outlook now is more mixed and uncertain.