THE IMF announced on Tuesday (30) it has raised its 2024 global growth forecast to 3.1 per cent, citing unexpected resilience in major advanced and emerging market economies around the world, including the United States and China.
The updated figure, released in the latest World Economic Outlook (WEO) report, is 0.2 percentage points higher than the International Monetary Fund’s previous forecast in October.
“The global economy continues to display remarkable resilience, with inflation declining steadily and growth holding up,” IMF chief economist Pierre-Olivier Gourinchas told reporters in South Africa on Tuesday.
India continues to be an ongoing bright spot in the global economy. The IMF now expects it to grow by 6.5 per cent this year – up 0.2 percentage points from October – following an estimated growth rate of 6.7 per cent in 2023. However, while many Asian economies remain buoyant, Europe continues to cast a long shadow over the global outlook, with the IMF highlighting “notably subdued growth in the euro area.”
The UK, France and Italy are all also expected to see growth of one per cent or less this year, while Spain’s economy is forecast to fare slightly better, growing by 1.5 per cent. Germany is once again set to be the slowestgrowing G7 economy, expanding by just 0.5 per cent this year after contracting by an estimated 0.3 per cent in 2023.
The IMF now expects the US economy to grow by 2.1 per cent in 2024 – an election year in which president Joe Biden is seeking a second term – down slightly from an estimated 2.5 per cent in 2023.
This is largely due to the “statistical carryover effects from the stronger-than-expected growth outcome for 2023,” the IMF said.
China is predicted to hit 4.6 per cent growth this year, up 0.4 percentage points, though it is still expected to slow down from last year’s 5.2 per cent.
Gourinchas said, “The chance of a soft landing has increased, but the pace of expansion remains slow and risks remain.”
The IMF predicted that global growth will remain below its recent historical average of 3.8 per cent this year and next due to continued impacts of elevated interest rates, the withdrawal of pandemic-related government support, and persistently low levels of productivity.
The IMF’s inflation outlook remained unchanged at 5.8 per cent for 2024, but that masks an underlying shift between richer and poorer countries.
Inflation in advanced economies is now forecast to be 2.6 per cent in 2024, down 0.4 percentage points from October, while emerging and developing economies are expected to hit an annual inflation rate of 8.1 per cent, up 0.3 percentage points.
Despite some challenging forecasts, the overall picture in 2024 looks set to be less gloomy for many countries than it was in 2024: Every country cited in the report save Argentina is set to have positive growth this year.
“Excluding Argentina, global headline inflation will decline to 4.9 per cent this year,” he said.