JOHANNESBURG, WASHINGTON: The IMF on Tuesday edged its forecast for global economic growth higher, upgrading the outlook for both the US and China and citing faster-than-expected easing of inflation.
The IMF’s chief economist, Pierre-Olivier Gourinchas, said the global lender’s updated World Economic Outlook showed that a “soft landing” was in sight, but overall growth and global trade still remained lower than the historical average.
“The global economy continues to display remarkable resilience, with inflation declining steadily and growth holding up. The
chance of a ‘soft landing’ has increased,” Gourinchas told reporters in Johannesburg, adding, “We are very far from a global recession scenario.”
But he cautioned that the base of expansion was slow and risks remained, including geopolitical tensions in the Middle East and attacks in the Red Sea that could disrupt commodity prices and supply chains.
The IMF said the improved outlook was supported by stronger private and public spending despite tight monetary conditions, as well as increased labor force participation, mended supply chains and cheaper energy and commodity prices.
The IMF forecast global growth of 3.1 percent in 2024, up two-tenths of a percentage point from its October forecast, and said it expected unchanged growth of 3.2 percent in 2025. The historical average for the 2000-2019 period was 3.8 percent.
Global trade was expected to expand by 3.3 percent in 2024 and 3.6 percent in 2025, well below the historical average of 4.9 percent, with gains weighed down by thousands of fresh trade restrictions.
The IMF stuck with its October forecast for headline inflation of 5.8 percent for 2024, but lowered the 2025 forecast to 4.4 percent from 4.6 percent in October. Excluding Argentina, which has seen inflation spike, global headline inflation would be lower, Gourinchas said.
Advanced economies should see average inflation of 2.6 percent, down four-tenths of a percentage point from the October forecast, with inflation set to reach central bank targets of 2 percent in 2025. By contrast, inflation would average 8.1 percent in emerging market and developing economies in 2024, before easing to 6 percent in 2025.