IMF Upgrades Global Economic Outlook: Soft Landing Ahead ➤

IMF Upgrades Global Economic Outlook: Soft Landing Ahead

Global Economy Set for Steady Growth with Reduced Inflation and Strong US Performance

The International Monetary Fund (IMF) has revised its global economic forecast, painting a picture of a “soft landing” for the world economy. Anticipating steady if modest growth, the IMF now projects a 3.2% expansion worldwide for the current year, matching the pace of 2023, with a similar growth outlook for 2025.

Key to this outlook is the robust performance of the United States, the largest economy globally. The IMF has upgraded its growth projection for the US to 2.7% for this year, reflecting stronger-than-expected growth compared to earlier estimates.

Despite lingering concerns about inflation, the IMF anticipates a decline in global inflation from 6.8% in the previous year to 5.9% in 2024 and further to 4.5% in 2025. This trend is supported by the efforts of major central banks, including the Federal Reserve, to raise interest rates to combat inflationary pressures.

The IMF’s Chief Economist, Pierre-Olivier Gourinchas, highlighted the surprising resilience of the global economy amid inflationary challenges. However, he cautioned that growth prospects remain constrained by persistently high interest rates, sluggish productivity gains, and the phasing out of government support measures introduced during the pandemic.

While geopolitical tensions and adverse effects of higher interest rates pose risks to economic expansion, China’s economy faces internal challenges, including a downturn in the real estate market and trade tensions. Despite these hurdles, China reported better-than-expected economic growth in the first quarter, driven by stimulus measures and increased demand.

Japan and the eurozone are expected to experience slower growth, while the UK anticipates gradual economic progress. In the developing world, India is projected to outpace China in growth, albeit at a slower rate, with sub-Saharan Africa and Latin America also expected to see modest growth acceleration.