The International Monetary Fund (IMF) now thinks that the world economy will grow by 3% this year.
The 0.2% rise from April’s prediction was partly due to more people traveling after the pandemic.
The expected uptick also took into account a strong jobs market and service sector.
But the IMF warned that rising consumer prices and higher interest rates were still risks in rich countries.
China’s slow economic rebound was also one of the biggest problems that could happen in the future.
Pierre-Olivier Gourinchas, the head economist at the IMF, told the BBC that the effects of the rebound from the pandemic are still being felt.
He said that there was “strong resilience” in the market for services, going out, and travel and tourism in the first three months of 2023.
“Countries that are popular tourist spots have done pretty well. “Countries with more manufacturing hubs may have done a little less well,” Mr. Gourinchas said.
The latest numbers from the International Air Transport Association show that global air traffic continued to improve in May, hitting 96.1% of pre-covid levels.
But the IMF says there isn’t much room for the economies of southern Europe that depend on tourists to get better. Some of these economies have been badly hurt by wildfires.
This year, so-called emerging economies like China and India will grow the fastest, while advanced countries like Europe and the U.S. will grow more slowly.
Since the last forecasts in April, the United Kingdom’s growth has been one of the most improved, with the IMF confirming May’s prediction of 0.4% growth instead of 0.3% drop.
The IMF said that this was because “consumption and investment were stronger than expected because of the confidence effects of falling energy prices” and “post-Brexit uncertainty was lower.”
However, this makes the UK’s growth the second slowest among the G7 group of big economies, behind only Germany, which is expected to shrink by 0.3%.
The biggest economy in the Eurozone is already in a slump because people have cut back on spending because prices have gone up.
As sugar and milk prices rise, UK food prices are “worryingly high.”
The rate of inflation in the US is the slowest it has been in two years. Mr. Gourinchas urged central banks to do everything they could to keep bringing down inflation, which is rising consumer prices.
The 2% inflation goal for the US Federal Reserve, the Bank of England, and the European Central Bank is still a long way off.
Banks have been raising interest rates to make it more expensive to borrow money and to slow the economy down. Interest rates are now higher than they were before the global financial disaster of 2008.
Most people think that both the US central bank and the European central bank will raise interest rates again this week.
As the country continues to heal nervously from the pandemic, there is still a lot of uncertainty in the property market because of China’s debt problems.
The IMF says that some of the biggest problems facing the world economy are the future of China, the war in Ukraine, inflation, and the rising cost of borrowing money.
It says that the future for the world economy is getting better, but it is still lower than the average of 3.8% seen between 2000 and 2019.
