The International Monetary Fund (IMF) slightly raised its global economic outlook for this year based on easing inflation this year and stronger-than-expected resilience in some economies, including the United States.
In the World Economic Outlook (WEO) released on the 30th (local time), the IMF predicted global economic growth to be 3.1 percent this year.
This is a 0.2 percentage point increase from this year’s growth rate predicted by the IMF in October last year.
The IMF cited “stronger-than-expected resilience and China’s financial support in the United States, and several large emerging markets and developing countries” as reasons for the upward revision.
However, he said that the growth rate between 2024 and 2025 is lower than the average of 3.8 percent between 2000 and 2019, and diagnosed that high base interest rates, suspension of government financial support, and low productivity are weighing on the economy.
The global economic growth forecast for next year is 3.2 percent, the same as the October forecast last year.
The IMF predicts that global inflation will fall from 6.8% in 2023 to 5.8% in 2024 and 4.4% in 2025 as inflation slows faster than expected in most regions.
The IMF said, “Thanks to the easing of inflation and steady growth, the possibility of a hard landing for the economy has been lowered.”
The IMF predicted that the growth rate of the United States, which showed a strong growth rate (2.5%) in 2023, will slow to 2.1% in 2024 and 1.7% in 2025 due to the effects of tightening policies and easing the labor market.
The IMF raised its 2024 forecast by 0.6 percentage point from October last year, reflecting the larger-than-expected growth of the U.S. economy last year.
The IMF predicted that the eurozone, which had stagnated in the aftermath of the war in Ukraine, would recover from 0.5% in 2023 to 0.9% in 2024 and 1.7% in 2025.
Japan is expected to see its growth rate decline from 1.9% in 2023 to 0.9% in 2024 and 0.8% in 2025 as the effect of the yen’s depreciation disappears.
The IMF forecast China’s 2024 growth rate to 4.6%, up 0.4 percentage point from the previous forecast.
The IMF explained that it reflected stronger-than-expected growth in the Chinese economy and increased government spending.
However, China’s economic growth is expected to continue to slow down to 5.2% in 2023, 4.6% in 2024, and 4.1% in 2025.
Thanks to robust domestic demand, India forecasts growth to reach 6.5% between 2024 and 2025, 0.2 percentage points higher than its previous forecast.
The IMF predicted that the global economy could grow stronger if inflation slows faster than expected, the Chinese economy shows faster resilience, or productivity improves with artificial intelligence (AI).
The downside factors include soaring raw material prices, continued inflation, and a slowdown in China’s economy.
The IMF was concerned about the possibility of a surge in logistics prices as conflict in the Middle East increased energy prices and continued attacks on merchant ships in the Red Sea, a gateway to 11% of world trade.
