Washington: The International Monetary Fund (IMF) announced on Tuesday an upward revision of its 2024 global growth forecast to 3.1%, citing unexpected resilience in major advanced and emerging market economies worldwide. The revised figure, unveiled in the latest World Economic Outlook (WEO) report, represents a 0.2 percentage points increase from the IMF’s previous October forecast.
IMF chief economist Pierre-Olivier Gourinchas stated, “We had simultaneously less inflation and more growth,” emphasizing the global nature of this economic resilience, with notable performances from countries such as China, Russia, Brazil, and India.
Despite the positive adjustment, global growth is anticipated to stay below its recent historical average of 3.8% due to the lingering impacts of elevated interest rates, withdrawal of pandemic-related government support, and persistently low productivity levels.
Global Inflation Outlook
Within the Group of Seven (G7) advanced economies, European countries are expected to face continued challenges, resulting in weak growth. Japan and Canada, however, are forecasted to fare slightly better.
The overall inflation outlook remains at 5.8% for 2024, with advanced economies projecting 2.6%, a decrease of 0.4 percentage points from October. In contrast, emerging and developing economies are expected to experience an annual inflation rate of 8.1%, up 0.3 percentage points, driven partially by challenges in Argentina.
US and China Growth
The United States and China, the two largest economies globally, witnessed significant upgrades in their 2024 growth outlook, indicating a less substantial slowdown than initially anticipated by the IMF. The U.S. economy is projected to grow by 2.1% in 2024, attributed to statistical carryover effects from stronger-than-expected growth in 2023.
China’s economy is expected to achieve 4.6% growth in 2024, a positive deviation from previous estimates, credited to less severe impacts of property sector difficulties and significant fiscal support from authorities.
India’s Continuing Bright Spot
India remains a consistent bright spot in the global economy, with the IMF revising its growth forecast to 6.5% for 2024, an increase of 0.2 percentage points from October. Other countries like Russia, Iran, and Brazil also received improved growth prospects for the upcoming year.
Challenges in Europe
Despite buoyancy in many Asian economies, Europe continues to cast a shadow, with notably subdued growth in the euro area. Germany is expected to be the slowest-growing G7 economy, while the United Kingdom, France, and Italy are forecasted for modest growth. Spain’s economy is projected to fare slightly better.
The tepid euro area growth reflects weak consumer sentiment, high energy prices, and weakness in interest-rate-sensitive manufacturing and business investment, as highlighted in the WEO report.
Positive Global Outlook
Despite some challenging forecasts, the overall global economic outlook for 2024 appears less gloomy compared to the previous year, with every country cited in the WEO report, except Argentina, poised for positive growth.
