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As the IMF Raises Hopes for Global Economic Recovery, What Does This Mean for Crypto?

2 mins
31 January 2023, 13:00 GMT+0000
Updated by Geraint Price
31 January 2023, 15:04 GMT+0000
In Brief
  • The IMF has predicted global GDP at 2.9% in 2023.
  • According to the WEO report, global growth will bottom out in 2023 and rise in 2024.
  • With decreasing inflation, the experts predict a crypto recovery.
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The International Monetary Fund’s latest World Economic Outlook report predicts global economic recovery after what was a challenging year for the global economies with tough geopolitical and macroeconomic conditions.

The IMF releases World Economic Outlook (WEO) reports in Jan., April, July, and Oct. It documents various forecasts for economic factors such as global economic growth, inflation, etc. According to the latest report, Gross Domestic Production (GDP) will shrink compared to 2022, but the fund predicts growth to bottom out this year.

IMF Predicts Global GDP at 2.9% in 2023

In the Oct. 2022 WEO report, IMF forecast a 2.7% growth for the global economy. But the Jan. report raised the forecast by 0.2% to 2.9%, raising the hopes for a quicker global economic recovery. The fund also expects growth to bottom out in 2023 and accelerate from 2024.

IMF GDP Predictions
Source: Bloomberg

India and China will continue leading the world’s economic growth in 2023 and 2024. But the IMF ha a dire prediction for the U.K., predicting a -0.6% contraction this. British commentators believe that the projections are “almost always wrong” and the U.K. will outperform expectations.

Will Crypto Recover With Declining Inflation?

According to Bloomberg, the world Consumer-Price Index (CPI) is expected to hit 6.6% this year after it peaked at 8.8% in 2022. Furthermore, compared to last year, inflation is forecasted to decrease in 84% of countries.

The Federal Reserve (Fed) has been raising interest rates aggressively since 2022 from 0% to 4.5%. With the declining inflation rate, it might consider pivoting from quantitative tightening. Various experts have frequently predicted that if the Fed diverts from its current monetary policy, Bitcoin and the entire crypto market might start a new bull run.

Most recently, Anthony Scaramucci, the founder of investment advisory firm SkyBridge Capital predicted 2023 to be a recovery year for Bitcoin. He believes that Bitcoin will trade between $50,000 to $100,000 in a couple of years.

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