Global economic growth estimated at 2.6 pct amid strong U.S. job market, China’s reopening: KIEP

South Korea's state-run economic think tank said Tuesday it has raised the global economic growth outlook to 2.6 percent for 2023, on the back of the strong U.S. job market and China's reopening.

The outlook marks a 0.2 percentage-point increase from a 2.4 percent expansion projected in November, according to the Korea Institute for International Economic Policy (KIEP).

The 2023 growth estimate comes in line with the estimate by the Organization for Economic Cooperation and Development but is lower than the 2.8 percent suggested by the International Monetary Fund.

The revision came as the KIEP expects the U.S. economy to grow 1.2 percent this year, up 0.6 percentage point from the previous report, on its strong job market along with hopes that its inflation has reached the peak.

The Chinese economy is also anticipated to expand 5.5 percent on-year in 2023, up from the previous outlook of 4.8 percent, amid Beijing's efforts to revitalize domestic consumption.

The KIEP, however, noted the global economy is set to continue to face jitters amid inflation and high interest rates.

"Core inflation that still stays high and credit crunches sparked by high interest rates are expected to cause economic slowdown for a significant period of time in advanced economies," the KIEP said. "The recovery will also be extremely slow."

The KIEP said the economic growth projections for developing nations also have been mostly revised down amid inflation and weak exports.

In the second half of 2023, the institute said the global economy will "go through a narrow path heading toward a slow recovery."

"It is like sitting in a saddle," KIEP President Kim Heung-chong told reporters. "We are going through a very narrow path, and if something goes wrong, we can also fall."

Concerning other regions, the KIEP said the eurozone economy is set to move up 0.8 percent on-year in 2023, marking a sharp rise from zero growth estimated in November. The researcher said the revision came on the back of stronger private consumptions and trade.

The growth outlook for Russia came to 0.5 percent amid economic sanctions imposed by Western countries.

Last week, the Korea Development Institute slashed its growth outlook for the South Korean economy this year to 1.5 percent, citing slowing exports of chips. The latest estimate is down 0.3 percentage point from a 1.8 percent growth outlook suggested by the state-run think tank in February.

Source: Yonhap News Agency

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