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Informist, Tuesday, Jul 16, 2024

 

--IMF keeps global GDP growth forecast for 2024 unchanged at 3.2%

--IMF raises global GDP growth forecast for 2025 by 10 bps to 3.3%

--IMF lowers US GDP growth forecast for 2024 by 10 bps to 2.6%

--IMF raises euro area GDP growth forecast for 2024 by 10 bps to 0.9%

--IMF raises China GDP growth forecast for 2024 by 40 bps to 5.0%

--IMF raises China GDP growth forecast for 2025 by 40 bps to 4.5%

 

NEW DELHI – The International Monetary Fund has kept its global GDP growth forecast for 2024 unchanged at 3.2% while raising the growth projection for 2025 by 10 basis points to 3.3%. In 2023, the global economy grew by 3.3%.

 

"Varied momentum in activity at the turn of the year has somewhat narrowed the output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential," the IMF said in the July update of its World Economic Outlook released today.

 

The momentum on global disinflation is slowing, signalling bumps along the path, the IMF said. "Services price inflation is holding up progress on disinflation, which is complicating monetary policy normalisation."

 

Upside risks to inflation have also increased, which has raised the prospect of "higher-for-even-longer interest rates", in view of escalating trade tensions and increased policy uncertainty, the IMF said. "To manage these risks and preserve growth, the policy mix should be sequenced carefully to achieve price stability and replenish diminished buffers."

 

The IMF has kept its global inflation forecast for 2024 unchanged at 5.9%, while lowering the inflation forecast for 2025 by 10 bps to 4.4%. In 2023, global inflation is estimated to have averaged 6.7%.

 

Growth surprised on the upside in many countries in Jan-Mar, although downside surprises in Japan and the US were notable, the IMF said.

 

The IMF has lowered its 2024 GDP growth forecast for the US by 10 bps to 2.6%, compared to a growth of 2.5% in 2023. This, the IMF said, reflects the slower-than-expected start to the year. Growth is projected to slow to 1.9% in 2025 as the labour market cools and consumption moderates, with fiscal policy starting to tighten gradually, the IMF said.

 

The fund has raised the GDP growth projection for euro area by 10 bps to 0.9% in 2024 against 0.5% in 2023. In 2025, the multilateral agency expects euro area growth to rise to 1.5%. "In the euro area, activity appears to have bottomed out," the IMF said. The IMF has raised the growth forecast on the back of stronger momentum in services and higher-than-expected net exports in the first half of the year. Growth is projected to rise to 1.5% in 2025.

 

The IMF has raised China's growth projection by 40 bps to 5.0% for 2024 and 4.5% for next year. Growth forecast for China has been raised primarily because of a rebound in private consumption and strong exports in the first quarter, the IMF said.

 

Overall, risks to the outlook remain balanced, but some near-term risks have gained prominence, the IMF said. "These include upside risks to inflation that stem from a lack of progress on services disinflation and price pressures emanating from renewed trade or geopolitical tensions."  End

 

Reported by Shubham Rana

Edited by Ashish Shirke

 

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