Risks remain tilted to the downside, central banks must keep acting to slow inflation.
"The outlook is less gloomy than in our October forecast," IMF research director Pierre-Olivier Gourinchas said in a blog post. "The fight against inflation is starting to pay off, but central banks must continue their efforts."
Europe has shown resilience amid the energy squeeze and the Ukraine war, while the IMF raised China's 2023 growth forecast 0.8pp to 5.2% citing easier Covid restrictions. While U.S. growth will slow this year to 1.4%, the estimate was raised 0.4pp on robust domestic demand last year.
On the downside, UK GDP was marked down 0.9pp to show a 0.6% contraction this year. The IMF pointed to "tighter fiscal and monetary policies and financial conditions and still-high energy retail prices weighing on household budgets."
The balance of risks remain negative, the IMF said, and core inflation hasn't peaked yet in most economies.
"The inflation news is encouraging, but the battle is far from won," Gourinchas said. "Inflation-adjusted interest rates remain low or even negative in the euro area and other economies, and there is significant uncertainty about both the speed and effectiveness of monetary tightening in many countries."
Source: IMF