The International Monetary Fund (IMF) has upgraded its global economic outlook for this year, projecting a “soft landing” scenario with steady, modest growth. The IMF predicts a 3.2% expansion worldwide in 2024, up from the previously forecasted 3.1%. This growth is being driven by strong performance in the United States, where the economy is expected to grow by 2.7% this year. The IMF also anticipates a decline in global inflation from 6.8% in 2023 to 4.5% in 2025, largely due to higher interest rates implemented by central banks.
Central banks such as the Federal Reserve, Bank of Japan, European Central Bank, and Bank of England have raised rates to combat inflation, aiming for a target rate of around 2%. In the United States, inflation has decreased from 9.1% to 3.5%, but remains above the Fed’s target level. Despite concerns that higher borrowing rates would lead to economic hardships, growth and hiring have continued even as inflation has slowed. The IMF’s chief economist noted that the global economy has remained stable and inflation is returning to target levels.
While the global economy has shown unexpected resilience, growth prospects remain restrained. The IMF warns that high interest rates, sluggish productivity gains, and the withdrawal of government economic support measures introduced during the pandemic could impede economic expansion. Geopolitical tensions, such as the conflict in Gaza, also pose a risk to global trade and energy prices. China, the second-largest economy, is facing challenges including a real estate market collapse and trade tensions, leading to an expected slowdown in growth from 5.2% in 2023 to 4.1% in 2025.
China recently reported faster-than-expected economic growth in the first quarter of the year, driven by stimulus measures and increased demand. The Chinese economy expanded at a 5.3% annual pace in January-March, surpassing analysts’ forecasts. In Japan, the economy is projected to slow from 1.9% in 2023 to 0.9% in 2024. The eurozone countries are expected to see weak growth of 0.8% in 2024, with the United Kingdom showing slow progress from 0.1% to 1.5% growth over the next year.
In the developing world, India is expected to outpace China in growth, though at a slower rate. India’s economy is forecasted to grow by 6.8% in 2024, down from 7.8% in 2023. Sub-Saharan Africa is projected to see a slow acceleration in growth, from 3.4% in 2023 to 4.1% in 2025. Latin American economies like Brazil and Mexico are expected to slow down through 2025, with Brazil facing challenges from high interest rates and Mexico from government budget cuts. Overall, the IMF’s outlook suggests a steady but slow recovery for the global economy, with continued risks from inflation and geopolitical tensions.
