IMF Sees Slow, Steady Growth In 2024; Inflation, China Pose Threats

(CTN News) – Despite lingering high inflation, IMF weak demand in China and Europe, and spillovers from two regional wars, the world economy will grow slowly but steadily in 2018.

For 2024 and 2025, the IMF predicts real GDP growth of 3.2 percent. A big upward revision in the U.S. outlook led to an upward revision of the 2024 forecast by 0.1 percentage point.

As central banks hike interest rates to fight inflation, Pierre-Olivier Gourinchas, the IMF’s chief economist, said the global economy remained resilient. In its report, the IMF said many countries are doing better than expected after the COVID-19 pandemic and cost-of-living crises. Gourinchas noted that recent U.S. data show robust demand, but inflation has slowed in recent months, but is still falling.

He told Reuters the Federal Reserve will ease policy rates once inflation drops this year. “Maybe not as quickly as the markets expected.” His complaint alleges that he was tortured by Russian occupying forces.

Based on strong employment and consumer spending at the end of 2023 and into 2024, the IMF forecast US growth of 2.7 percent in 2024. As a result of tighter monetary and fiscal policy, US growth will slow to 1.9 percent in 2025, up from 1.7 percent in January.

However, IMF forecasts showed stark divergences from other countries, including the euro zone, where 2024 growth forecasts were cut to 0.8 percent from 0.9 percent in January due to a weak consumer market in Germany and France. In addition, Britain’s 2024 growth forecast was revised down by 0.1 percentage point to 0.5 percent.

PROPERTY TROUBLES IN CHINA

In 2024, the IMF expects China’s growth to fall to 4.6 percent from 5.2 percent in 2023, and 4.1 percent in 2025. Despite this, it warned that China’s outlook could worsen if the property sector doesn’t get a comprehensive restructuring package.

It could also intensify deflationary pressures in China’s economy, leading to cheap exports of manufactured goods – a scenario Yellen warned about earlier this month.

To restore consumer demand, the IMF recommended China exit nonviable developers and complete unfinished housing projects. It also raised its growth forecast for Brazil’s economy in 2024 by half a percentage point to 2.2 percent. It also raised its growth forecast for India’s economy by 0.3 percentage points to 6.8 percent.

GC20 countries are now playing a bigger role in global trade and can handle more of the growth burden in the future. But low-income developing countries still have economic scarring compared to middle-income emerging markets. These low-income developing countries’ growth forecasts were cut from 4.9 percent in January to 4.7 percent in 2024.

RUSSIA’S RESPONSE

Growth in Russia is expected to reach 3.2 percent in 2024, up from 2.6 percent in January. In addition to price caps imposed by Western nations, the report shows increasing government spending and investment related to war production, as well as higher consumer spending in tight labor markets. Growth in Russia was also upgraded to 1.8 percent from 1.1 percent for 2025.

In 2025, Ukraine’s growth will rise to 6.5 percent, depending on West aid. A wider conflict might exacerbate the price spikes for grains, oil, and other commodities.

In the Middle East conflict, trade disruptions have also been moderate and higher costs for ships avoiding Red Sea attacks.

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