IMF raises 2024 global economic growth outlook
WASHINGTON: The International Monetary Fund on Tuesday edged its forecast for global economic growth higher and cited faster-than-expected easing of inflation, Reuters reported.
The IMF’s chief economist, Pierre-Olivier Gourinchas, said the global lender’s updated World Economic Outlook showed that a “soft landing” was in sight, but overall growth and global trade still remained lower than the historical average.
“We find that the global economy continues to display remarkable resilience and we are now in the final descent toward a ‘soft landing’ with inflation declining steadily and growth holding up,” Gourinchas said. “But the base of expansion remains on the slower side and there might be turbulence ahead.”
The IMF said the improved outlook was supported by stronger private and public spending despite tight monetary conditions, as well as increased labor force participation, mended supply chains and cheaper energy and commodity prices.
The IMF forecast global growth of 3.1 per cent in 2024, up two-tenths of a percentage point from its October forecast, and said it expected unchanged growth of 3.2 per cent in 2025. The historical average for the 2000-2019 period was 3.8 per cent.
It forecast global trade growth of 3.3 per cent in 2024 and 3.6 per cent in 2025, well below the historical average of 4.9 per cent, with gains weighed down by some 3,000 trade restrictions that were imposed in 2023.
The IMF stuck with its October forecast for headline inflation of 5.8 per cent for 2024, but lowered the 2025 forecast to 4.4 per cent from 4.6 per cent in October. Advanced economies should see average inflation of 2.6 per cent, down four-tenths of a percentage point from the October forecast, with inflation set to reach central bank targets of 2 per cent in 2025.
By contrast, inflation would average 8.1 per cent in emerging market and developing economies in 2024, before easing to 6 per cent in 2025. The United States got one of the biggest upgrades in the January update of the IMF outlook, with its GDP now forecast to expand by 2.1 per cent in 2024 versus the 1.5 per cent forecast in October. Growth was expected to ease to 1.7 per cent in 2025.
The euro area got a downgrade, and was now expected to grow just 0.9 per cent in 2024 and 1.7 per cent in 2025, with the biggest European economy - Germany - expected to see minimal GDP growth of 0.5 per cent in 2024 instead of the 0.9 per cent forecast in October.
