IMF raises global forecast for 2024, India continues to be bright spot

IMF’s headline inflation outlook for 2024 remains unchanged at 5.8%

Washington:

The International Monetary Fund announced on Tuesday that it would raise its global economic growth forecast to 3.1% in 2024, citing unexpected “resilience” in the world’s major developed and emerging market economies.

The updated data released in the latest World Economic Outlook (WEO) report is 0.2 percentage points higher than the International Monetary Fund’s October forecast.

“We have achieved both lower inflation and faster economic growth,” IMF chief economist Pierre-Olivier Gurinchas told reporters ahead of the report’s release.

“This is not just an American story. From last year to 2024, many, many places around the world have shown great resilience,” he said, highlighting countries such as China, Russia, Brazil and India.

Despite the upgrade, global economic growth is expected to remain below the recent historical average of 3.8% this year and next due to the lingering impact of rising interest rates, the withdrawal of government pandemic-related support and persistently low productivity levels.

Among the Group of Seven advanced economies, growth looks set to remain weak in European countries, reflecting ongoing challenges, while conditions are expected to improve slightly in Japan and Canada.

The International Monetary Fund’s overall inflation outlook for 2024 was unchanged at 5.8%, but this masks a major fundamental shift between rich and poor countries.

The inflation rate in advanced economies is currently expected to be 2.6% in 2024, down 0.4 percentage points from October, while the annual inflation rate in emerging and developing economies is expected to be 8.1%, up 0.3 percentage points from October.

The price increases are largely due to Argentina’s continued struggles, with consumer prices rising by more than 200% last year amid the ongoing economic crisis.

– US, China boost growth –

The United States and China, the world’s two largest economies, have both significantly raised their growth prospects for 2024, making their economies expected to slow down less than the International Monetary Fund had previously expected.

The International Monetary Fund now expects the U.S. economy to grow by 2.1% in 2024, an election year when President Joe Biden seeks reelection, down slightly from the 2.5% estimate in 2023.

The IMF said this was mainly due to “statistical carryover effects from stronger-than-expected growth results in 2023.”

Meanwhile, China’s economy is expected to grow by 4.6% this year, down from 5.2% last year.

Gurinchas said the better-than-expected growth figures were attributable to the impact of “difficulties” in the housing sector being less severe than expected by the International Monetary Fund and also to “significant fiscal support from the authorities.”

The continuing bright spot in the global economy remains India, with the International Monetary Fund now expecting India to grow 6.5% this year, 0.2 percentage points higher than in October, and 6.7% expected in 2023.

The fund also boosted growth prospects for Russia, Iran and Brazil in the year ahead.

– Europe still faces challenges –

While many Asian economies remain buoyant, Europe continues to cast a long shadow over the global outlook, with the International Monetary Fund highlighting “significant weakness in euro area growth.”

Germany will once again be the slowest-growing economy in the Group of Seven, growing just 0.5% this year after contracting 0.3% in 2023.

The UK, France and Italy are also expected to grow at or below 1.0% this year, while Spain’s economy is expected to do slightly better, with growth of 1.5%.

The International Monetary Fund noted in its World Economic Outlook report that tepid growth in the euro area reflects “weak consumer confidence, the continuing impact of high energy prices, and weakness in interest-rate-sensitive manufacturing and business investment.”

Despite some challenging forecasts, the overall picture for many countries does not appear to be any less bleak than in 2024: every country mentioned in the WEO report (except Argentina) will achieve this this year Positive growth.

That’s an improvement from 2023, when four of the 30 economies mentioned in the report contracted, according to the International Monetary Fund.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)