The International Monetary Fund logo is seen at the IMF headquarters building in Washington, US. Photo: File
The International Monetary Fund (IMF) has raised its 2024 global growth forecast amid greater-than-expected resilience in the US and several large emerging market and developing economies, as well as fiscal support in China.
In its World Economic Outlook released today, the IMF said global growth would rise to 3.1% in 2024, up from 2.9% previously forecast in October 2023.
The forecast for 2024 is about 0.2 percentage point higher compared with that in October 2023, reflecting upgrades for China, the United States, and large emerging market and developing economies.
However, the IMF kept the forecast for 2025 unchanged at 3.2%.
IMF chief economist Pierre-Olivier Gourinchas said the global economy had begun the final descent toward a soft landing, with inflation declining steadily and growth holding up.
Gourinchas, however, warned that the pace of expansion remained slow, and turbulence may lie ahead.
“The global economy continues to display remarkable resilience, with inflation declining steadily and growth holding up. The chance of a soft landing has increased, but the pace of expansion remains slow and risks remain,” Gourinchas said.
“On the demand side, global activity was supported by stronger private and government spending, despite tight monetary conditions. On the supply side, increased labour force participation, mended supply chains, and cheaper energy and commodity prices helped despite renewed geopolitical uncertainties.
“Important divergences remain. We expect slower growth in the United States where tight monetary policy is still working through the economy and in China where weaker consumption and investment continue to weigh on activity.
“In the Euro area, activity is expected to rebound slightly after a challenging 2023 when high energy prices and tight monetary policy restricted demand.”
Nevertheless, Gourinchas said the projection for global growth in 2024 and 2025 was below the historical annual average of 3.8%, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth.
Gourinchas said advanced economies were expected to see growth decline slightly in 2024 before rising in 2025, with a recovery in the euro area from low growth in 2023 and a moderation of growth in the United States.
He said emerging market and developing economies were expected to experience stable growth through 2024 and 2025, with regional differences.
In sub-Saharan Africa, Gourinchas said growth was projected to rise from an estimated 3.3% in 2023 to 3.8% in 2024 and 4.1% in 2025.
“In sub-Saharan Africa, growth is projected to rise, as the negative effects of earlier weather shocks subside and supply issues gradually improve. Inflation continues to ease when earlier weather shocks subside and supply issues gradually improve,” he said.
Meanwhile, global inflation is expected to fall to 5.8% in 2024 and 4.4% in 2025, compared to 6.8% in 2023, with advanced economies seeing faster disinflation.
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