11 October 2023
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IMF publishes revised forecasts

By Daniel Richards

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.

Today’s Economic Data and Events

  • 10:00 Germany CPI inflation, September final, % y/y. Forecast: 4.5%
  • 11:00 Turkey current account balance, August. Forecast: USD -0.55bn

Fixed Income

  • US Treasury yields fell when cash trading resumed on Tuesday, on the back of dovish statements from several Fed officials. The 2yr yield declined 11bps to 4.97%, while the 10yr yield fell 15bps to 4.653%.
  • There were also declines in UK Gilt yields on the day. Yields on the 2yr Gilt fell by 4bps to 4.769%, while the 10yr yield declined 5bps to 4.423%.
  • In contrast, German Bund yields ticked higher with the 2yr yield rising 4bps to 3.061%.


  • The dollar fell against a basket of currencies on Tuesday. Both EURUSD and GBPUSD rose 0.4%, finishing the day at 1.0605 and 1.2287, respectively.
  • Commodity currencies also gained against the dollar. AUDUSD rose 0.3% to 0.6432, NZDUSD increased 0.4% to 0.6046 and USDCAD fell 0.05% to reach 1.3583.


  • Reports of potential China stimulus, and some dovish commentary from Fed officials, contributed to risk-on sentiment yesterday. While the Shanghai Composite dropped 0.7%, the Hang Seng added 0.8% and the Nikkei closed 2.4% higher.
  • There were similarly strong gains in Europe where the composite STOXX 600 ended the day 2.0% higher for its strongest day this year. The DAX and the CAC were both up 2.0% also, while the FTSE 100 added 1.8%.
  • In the US, gains were more muted with the Dow Jones, the S&P 500, and the NASDAQ gaining 0.4%, 0.5%, and 0.6% respectively.
  • Locally, the DFM dropped 0.1% and the ADX 0.2%.


  • Oil prices fell yesterday after the biggest rally of the year on Monday, as the currently limited impact of recent political tensions on the market became clearer. Brent futures dropped -0.6% to USD 87.7/b, while WTI fell 0.5% to USD 86.0/b.

Written By

Daniel Richards Senior Economist

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