IMF Raises Global Growth Forecast Citing US, China Factors
The International Monetary Fund (IMF) has provided an updated economic forecast, indicating an improvement in global economic growth prospects. The organization predicts that the global economy will expand by 3.1% in 2024, which aligns with the growth rate of 2023 and represents an increase from the 2.9% forecast made in October. This positive revision is attributed to stronger-than-anticipated economic performance in the United States and a deceleration in inflation rates.
In the United States, the economy showed resilience with a growth of 2.5% last year, despite the impact of higher borrowing costs. For 2024, the IMF projects a 2.1% growth for the U.S. economy. Global inflation is anticipated to fall to 4.9% in 2024, continuing a trend of declining inflationary pressures. The IMF also notes that inflation in advanced economies is expected to reduce from 6.8% in 2023 to 5.8% in the following year. This is seen as a result of factors such as higher interest rates, an increase in the labor supply, and lower energy prices following the conflict in Ukraine.
However, the IMF cautions against several risks that could dampen economic growth, including geopolitical tensions that might disrupt supply chains and energy resources. Tight monetary policies are expected to slow growth in both the United States and China. Additionally, there are concerns over financial market overconfidence regarding the Federal Reserve's interest rate trajectory, with speculation that rates could be cut as early as March. Moreover, the IMF downgraded Japan's economic growth forecast to 0.9% from the previous 1% estimate.
Overall, the IMF's revised outlook suggests a cautiously optimistic scenario for the global economy, with a recognition of ongoing challenges and regional variances.
