The IMF has slightly raised its global economic growth forecast, reflecting a positive shift in the United States and China’s economic outlooks.
According to Chief Economist Pierre-Olivier Gourinchas, this upgrade stems from a quicker-than-anticipated inflation reduction. The global growth rate in 2024 is now predicted at 3.1%, a slight increase from the previous forecast.
Gourinchas emphasized the global economy’s resilience, with a gradual decline in inflation and steady growth. However, he cautioned about potential future challenges. The IMF’s optimistic outlook is underpinned by robust private and public spending despite tight monetary policies and improvements in labour force participation and supply chains.
For 2024, the IMF anticipates global trade growth at 3.3%, below the historical average. Inflation forecasts remain unchanged for 2024 but are reduced for 2025. The IMF predicts lower average oil prices in the coming years.
The report also discusses geopolitical risks, such as Red Sea shipping attacks, but notes their limited economic impact. The U.S. received a notable GDP growth upgrade for 2024, while the euro area faced a downgrade. China’s growth forecast improved, reflecting fiscal support and a less severe property sector slowdown.
Central banks, including the U.S. Federal Reserve and the European Central Bank, are expected to maintain current interest rates until late 2024. The IMF advised the Bank of Japan to be prepared for potential interest rate hikes.
Emerging markets are projected to grow at 4.1% in 2024, with Russia’s GDP expected to increase due to military spending. However, Latin America’s growth forecast is lowered due to Argentina’s negative growth.
The global outlook balances positive and negative risks, with lower fuel prices potentially aiding faster inflation reduction. At this stage, the IMF considers the risks evenly distributed.
