IMF raises global growth forecast despite medium-term pessimism
The International Monetary Fund (IMF) released its latest World Economic Outlook (WEO) report on Tuesday, announcing an upward revision in the global economic growth forecast for the current year. The IMF now anticipates a growth rate of 3.2 percent in 2024, an increase of 0.1 percentage point from its previous estimate in January. However, the report maintains a cautious stance on the medium-term outlook, signaling persistent challenges on the horizon.
According to IMF Chief Economist Pierre-Olivier Gourinchas, while the global economy continues to exhibit resilience with steady growth and decreasing inflation, significant hurdles remain. The report highlights the ongoing efforts by central banks to manage inflation without jeopardizing employment or economic expansion, indicating a delicate balancing act.
The publication of the WEO coincides with the commencement of the IMF and World Bank’s semi-annual meetings in Washington, where discussions center on assisting heavily indebted nations and addressing climate change concerns. Amidst these discussions, notable disparities emerge among advanced economies.
In the United States, economic growth is projected to accelerate to 2.7 percent in 2024, reflecting an upward revision from previous estimates. Conversely, the euro area is expected to experience sluggish growth of 0.8 percent this year, with only a modest uptick to 1.5 percent anticipated in 2025. Similar adjustments have been made to growth forecasts for the United Kingdom, Canada, and Japan.
Despite these fluctuations, China’s growth outlook remains unchanged, with anticipated growth rates of 4.6 percent for 2024 and 4.1 percent for 2025. However, emerging market economies exhibit varied trajectories, with India experiencing robust growth of 6.8 percent in 2024, attributed to strong domestic demand and demographic factors.
In a surprising turn, Russia’s economic prospects have been revised upwards despite ongoing geopolitical tensions. The IMF now predicts growth rates of 3.2 percent for 2024 and 1.8 percent for 2025, citing factors such as stable oil exports and resilient private consumption.
While the IMF report paints a relatively optimistic picture for the immediate future, it warns of persistently weak medium-term growth. Structural barriers hindering capital and labor mobility, coupled with slower convergence in living standards for lower-income countries, contribute to this subdued outlook. The IMF projects global growth to reach 3.1 percent by 2029, significantly below pre-pandemic forecasts, underscoring the enduring challenges faced by the global economy.
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