According to projections from the International Monetary Fund (IMF), global growth will remain constant at 3.2% in 2024 and 3.3% in 2025.
The most recent World Economic Outlook (WEO) Update Report for July 2024 from the IMF, titled “The Global Economy in a Sticky Spot,” was made public on Tuesday. Even while the prediction matched the April 2024 WEO, the report noted that there had been significant subsurface changes since the April WEO.
According to the report, growth in advanced economies was predicted to converge over the upcoming quarters. For example, in the US, projected growth in 2024 was cut down to 2.6%.
“This represents the slower-than-expected start to the year, coming in 0.1 percentage points below April’s projections.
“Growth is predicted to moderate to 1.9% in 2025 as the labor market cools and consumption declines, and fiscal policy begins to gradually tighten.”
According to the research, following an essentially flat 2023, a minor pickup of 0.9% was anticipated for the Euro area in 2024.
Stronger momentum in services and higher-than-expected net exports in the first half of the year are the main drivers of this.
It stated that the growth estimate for emerging markets and developing economies had been revised upward; stronger activity in Asia, especially in China and India, was expected to fuel the increase.
The growth estimate for China is now projected to reach 5% in 2024, mostly due to a spike in domestic demand and robust exports.
The growth estimate for India has also been updated, coming in at 7.0% for this year.
According to the report, growth in Brazil and Mexico for 2024 has been revised down due to the near-term impact of flooding and demand moderation, respectively, for Latin America and the Caribbean.
“Yet, in order to account for the reconstruction after the floods and favorable structural factors, such as an increase in hydrocarbon production, growth has been revised upward for Brazil in 2025.”
It stated that prospects for the Middle East and Central Asia were clouded by oil production and regional tensions.
It revealed that Saudi Arabia’s growth estimate for 2024 had been revised down by 0.9 percentage points; the continuation of oil production cuts is the primary cause of the adjustment.
According to the report, the growth estimate for Sub-Saharan Africa has been lowered down.
“This is primarily due to a downward revision of Nigeria’s growth outlook of 0.2 percentage points amid weaker than expected activity in the first quarter of 2023.”
It predicted that while worldwide inflation would continue to fall, it would do so more slowly and would be higher in developing and emerging markets than in developed ones.
“However, for the median emerging market and developing economy, inflation is already close to pre-pandemic levels, partly due to falling energy prices.”
As in the April 2024 WEO, the study stated that overall risks to the outlook remained balanced; however, certain near-term threats had become more prominent.
“These include price pressures resulting from renewed trade or geopolitical tensions, as well as upside risks to inflation stemming from a lack of progress on services disinflation.”
“The escalation of trade tensions could increase the cost of imported goods along the supply chain, thereby raising near-term risks to inflation.”
It stated that policymakers faced two tasks when output disparities began to shrink and inflation decreased.
“These tasks include resolving the fallout from previous crises, such as rebuilding depleted safety nets and sustainingly stimulating development, as well as persistently restoring price stability.
“This will necessitate careful calibration and sequencing of the policy mix in the near term.” (NAN)
