In the World Economic Outlook update, IMF upgraded global growth forecast for 2024 by 0.2% to 3.1%. 2025 growth forecast was left unchanged at 3.2%. This upward revision largely stems from stronger-than-expected economic resilience in the US and key emerging markets, along with fiscal support measures in China.
Also, IMF anticipates slowdown in global inflation to 5.8% in 2024 and a further reduction to 4.4% in 2025. With this expected disinflation and steady economic growth, “likelihood of a hard landing has receded”, and risks to global growth are now viewed as “broadly balanced”.
IMF outlines several potential upside and downside risks to its forecast. Upside risks include faster disinflation potentially leading to looser financial conditions and temporary growth boosts from more expansionary fiscal policies. However, these could pose longer-term challenges. Enhanced structural reforms could also positively impact productivity and have cross-border benefits.
On the downside, IMF cautions against risks like new commodity price increases due to geopolitical tensions, including ongoing conflicts in the Red Sea. Persistent inflation could maintain the need for tight monetary policies. Further, troubles in China’s property market or unexpected fiscal tightening in other regions could lead to lower growth than anticipated.
Looking at some details growth forecast:
- US at 2.1% in 2024 (up 0.6% from October estimate), 1.7% in 2025 (down -0.1% from October estimate).
- Eurozone at 0.9% in 2024 (down -0.3%), 1.7% in 2025 (down -0.1%).
- Japan at 0.9% in 2024 (down -0.1%), 0.8% in 2025 (up 0.2%).
- UK at 0.6% in 2024 (unchanged), 1.6% in 2025 (down -0.4%).
- Canada at 1.4% in 2024 (down -0.2%), 2.3% in 2025 (down -0.1%).
- China at 4.6% in 2024 (up 0.4%), 4.1% in 2025 (unchanged).
Full IMF release here.
