IMF Says Global 'Soft Landing' In Sight, Raises 2024 Economic Growth Outlook

  • The International Monetary Fund edged its forecast for global economic growth higher, upgrading the outlook for both the United States and China - the world's two largest economies - and cited 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. Still, overall growth and global trade remained lower than the historical average.
  • The IMF said the improved outlook was supported by stronger private and public spending despite tight monetary conditions, increased labour force participation, mended supply chains, and cheaper energy and commodity prices. The IMF forecasts global growth of 3.1% in 2024, up two-tenths of a percentage point from its October forecast, and retained a 3.2% forecast for 2025. However, this is below the 2000-2019 historical average of 3.8%.
  • Likewise, global trade growth forecasts of 3.3% in 2024 and 3.6% in 2025, well below the historical average of 4.9%, weighed down by 3,000 trade restrictions imposed in 2023. The IMF also stuck with its October forecast for headline inflation of 5.8% for 2024 but lowered the 2025 forecast to 4.4% from 4.6% 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%, down four-tenths of a percentage point from the October forecast, with inflation set to reach central bank targets of 2% in 2025. By contrast, inflation would average 8.1% in emerging markets and developing economies in 2024 before easing to 6% in 2025.
  • China's GDP is expected to grow by 4.6% in 2024, an upward revision of four-tenths of a percentage point from October and 4.1% in 2025. Gourinchas said the boost reflected significant fiscal support from the authorities and a less-severe-than-expected slowdown stemming from the property sector.
  • Gourinchas said the global outlook reflected more balanced upside and downside risks, with the risk of a wider conflict in the Middle East offset by the prospect that lower fuel prices could help inflation fall faster than expected.

(Source: Reuters)