IMF Chief Economist pointed to the resilience shown by the US, India, and Brazil, suggesting that a “soft landing” had been achieved in which inflation is cooling without triggering massive job losses
News Desk
WASHINGTON: The International Monetary Fund (IMF) recently released its updated World Economic Outlook, revealing a mixed bag of forecasts for the global economy. While the IMF raised its growth projections for key economies such as the United States, Brazil, and Britain for 2024, it simultaneously downgraded expectations for China, Japan, and the eurozone. The overarching global growth forecast remains unchanged at 3.2 percent, a figure that reflects a somewhat subdued economic climate as world financial leaders convene in Washington this week for the annual IMF and World Bank meetings.
In its report, the IMF anticipates that global growth will reach 3.2 percent in 2025, which is a marginal decrease from previous projections. The medium-term outlook is particularly concerning, with growth expected to decline to a lackluster 3.1 percent over the next five years—far below the pre-pandemic trend. This paints a cautious picture, highlighting the myriad risks facing the global economy, including ongoing armed conflicts, the potential for new trade wars, and the lingering effects of tight monetary policies.
Despite these challenges, IMF Chief Economist Pierre-Olivier Gourinchas expressed a note of optimism regarding certain countries. He pointed to the resilience shown by the US, India, and Brazil, suggesting that a “soft landing” had been achieved in which inflation is cooling without triggering massive job losses. Gourinchas declared, “It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries.”
However, he cautioned that there remains a risk of monetary policy becoming excessively tight if central banks do not adjust interest rates in response to declining inflation, potentially stifling growth and job creation. The IMF’s updated growth forecast for the US has been revised upward by two-tenths of a percentage point to 2.8 percent for 2024. This adjustment is attributed to stronger-than-expected consumer spending driven by rising wages and asset prices.
Similarly, the growth outlook for the US in 2025 has been raised by three-tenths of a percentage point to 2.2 percent, indicating a slight delay in returning to pre-pandemic growth levels. Brazil saw a significant upgrade of nine-tenths of a percentage point, with its projected growth for this year now at 3.0 percent, bolstered by robust private consumption and investment. In contrast, Mexico experienced a downturn, with its growth forecast reduced by seven-tenths of a percentage point to 1.5 percent, largely due to the impact of tighter monetary policy.
