IMF Sees Brighter Global Economic Outlook

Welcome back to World Brief, where we’re looking at the International Monetary Fund’s positive projections for the global economy, China’s new-ish foreign minister, and mass protests in Tunisia.

Let’s start the day on a positive note, shall we? Global risk of an economic meltdown is projected to decrease this year, according to a new World Economic Outlook report by the International Monetary Fund (IMF). The data, released on Tuesday, predicts global growth at 3 percent this year, 0.2 percentage points higher than the IMF’s last prediction in April. Next year’s growth forecast remains unchanged at 3 percent.

However, we’re not completely out of the woods yet. High inflation continues to trouble G-20 nations; developing countries are facing brutal debt distress; and international crises such as Russia’s war in Ukraine are expected to increase the price of food, fuel, and fertilizer—which will likely be exacerbated by Moscow leaving the Black Sea Grain Initiative.

“In the near term, the signs of progress are undeniable,” IMF chief economist Pierre-Olivier Gourinchas said. “Yet many challenges still cloud the horizon, and it is too early to celebrate.”

Of 190 countries surveyed, the United Kingdom saw the biggest win: a larger-than-expected jump of 0.7 percentage points to 0.4 percent growth, spurred by strong consumer spending. With this upward revision, the U.K. is expected to avoid a recession. But London wasn’t the only economy to receive good news. The United States is now more likely than previously predicted to decrease inflation rates without excessive job losses, with the IMF projecting GDP growth at 1.8 percent in 2023.

China’s economy is expected to grow by a modest 5.2 percent in 2023—and just 4.5 percent in 2024. Poor real estate investments, weak foreign demand, devastating zero-COVID policies, and high youth unemployment have all contributed to Beijing’s domestic shortcomings. The biggest loser of all, though, appears to be Germany. The European nation was the only IMF member whose economy is predicted to contract. Manufacturing production levels in the country fell for the third consecutive month in June and at their fastest rate since May 2020, dragging down the eurozone’s growth to be only 0.9 percent this year.

So long as no major financial crises strike, the IMF report suggests that the world’s economic future looks bright. Still, Gourinchas urged central banks to avoid premature easing until they are confident the economy is stable—advice the world’s rate-setters appear to be taking. On Wednesday, the U.S. Federal Reserve is expected to increase interest rates by a quarter point. On Thursday, the European Central Bank will likely raise rates to their highest level since 2000. And next week, the Bank of England is predicted to hike rates for the 14th consecutive time.

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Where is Qin Gang? Beijing is bringing back a familiar face to take over as foreign minister. Current Foreign Minister Qin Gang will be replaced by his predecessor, Wang Yi, effective immediately, state media reported on Tuesday. The decision was approved during a meeting of the National People’s Congress, which is usually only held at the end of each month. President Xi Jinping did not indicate why the transition was made.

The announcement comes a month after Qin disappeared from the public eye. He was last seen with Russian Deputy Foreign Minister Andrey Rudenko on June 25, less than 48 hours after the Wagner Group’s attempted coup in Russia. Apart from a vague mention of “health reasons,” no explanation for his disappearance was ever given.

The Chinese Communist Party has a history of secrecy and unexplained removals, FP’s James Palmer explored in last week’s China Brief. “Such disappearances have accelerated under Xi, who has purged high-level politicians as part of a campaign targeted both at corruption and at securing his hold on power.”

Demanding change. Around 300 protesters gathered in Tunisia’s capital on Tuesday to mark the second year of President Kais Saied’s self-coup. Demonstrators condemned state human rights violations and demanded the release of more than 20 opposition and other figures detained in February for “conspiracy against state security.” Activists continue to accuse Saied of engaging in a “witch hunt” against individuals for supporting freedom of speech and opinion.

Elected in 2019, Saied suspended the nation’s parliament in July 2021 and seized executive control. Since his reign began, the country has faced a financial reckoning, xenophobia has skyrocketed, food crises continue to afflict the general public, and young voters are increasingly turning against the state.

Another blow to women’s rights. Thousands of beauty salons in Afghanistan became the latest target of Taliban repression on Tuesday after the group announced the immediate closure of all such parlors following the end of a one-month deadline. Their reasoning: Salons violate their extremely strict interpretation of Islamic law and cause economic hardship for grooms’ families during wedding celebrations. It is unclear if force will be used against salons that do not abide by the new law, though precedent suggests violent punishment is likely.

International rights groups and the United Nations condemned the Taliban’s ruling, calling it another tactic to curb women’s rights. The announcement itself comes amid rare public protests against the new law. Since the Taliban came to power in August 2021, they have also barred women and girls from accessing education, public spaces, and most employment opportunities.

The joy of flying—or falling, let’s be honest—was celebrated in Kosovo this week during the country’s annual international bridge-diving competition. Evald Krnic, who also won last year, descended more than 65 feet into the White Drin River in the traditional “swallow style” dive to secure first place once again on Monday. This year was the 74th competition; personally, you will not find me registering for the 75th.