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IMF Raises Global Growth Outlook, Citing U.S. Resilience
January 30, 2024
The International Monetary Fund (IMF) has increased its global economic forecast, citing the unexpected resiliency of the U.S. economy and additional stimulus measures in China as Beijing looks to boost the flailing economy.
The agency now sees global growth of 3.1% in 2024, 0.2 percentage points higher than prior projections made in October, and growth of 3.2% in 2025.
In addition to the unexpected strength of the U.S. economy, which defied expectations of a slowdown with growth of 3.3% in the fourth quarter, the IMF also attributed its more optimistic outlook to the performance of large emerging market economies like Brazil and India, which have performed better than previously thought.
Despite new risks from commodity price spikes and trade disruptions amid geopolitical volatility in the Middle East, the IMF believes there is a reduced likelihood of a so-called “hard landing” for the global economy. The latest forecasts are projecting growth of 2.1% in the U.S., 0.9% in both the eurozone and Japan, and 0.6% in the United Kingdom in 2024.
China is facing a host of economic issues, such as a disappointing rebound in post-pandemic consumer spending, an ongoing property sector crisis, and now a potential deflationary spiral. In response, the government has rolled out a raft of stimulus measures, which contributed to the IMF’s upgrade, but the agency expects the world’s second-largest to continue to slow. After an estimated 5.4% GDP growth last year, the IMF expects growth of 4.6% in 2024. By 2028, growth is expected to fall as low as 3.4%.
Despite the rosier outlook, the IMF’s forecasts remain below the average 3.8% global growth seen between 2000 and 2019. Elevated interest rates, the withdrawal of some fiscal support programs, and lower productivity growth continue to weigh on the world economy, the institution said.
On the inflation front, the IMF is optimistic that price pressures will continue to ease. The IMF sees global inflation at 5.8% in 2024 and 4.4% in 2025. In advanced economies, inflation is expected to moderate to 2.6% this year and 2% in 2025.
