Global economic growth | The IMF revises its forecasts for 2024 slightly upward to 3.1%

(Washington) The good performance of the American economy and some of the main emerging countries, first and foremost China, should enable the global economy to do better this year than initially expected, the International Monetary Fund estimated on Tuesday (IMF), which however remains cautious for 2025.

The Washington institution now expects global growth of 3.1% for 2024, compared to 2.9% in its previous estimate in October, and growth very slightly accelerated to 3.2% in 2025, without change this time compared to the previous estimate.

If the global economy seems set to achieve a better year in 2024 than initially envisaged, the growth of its activity should remain significantly lower than the historical trend observed between 2000 and 2019, of 3.8% on average.

“We expect growth to slow in the United States, where monetary tightening continues to spread through the economy. In China, the weakness of consumption and investment will continue to weigh on while in the euro zone activity should rebound a little after a difficult year 2023,” detailed the chief economist of the IMF, Pierre-Olivier Gourinchas, during of a press conference in Johannesburg (South Africa).

Central bank rates, which are still high in order to fight inflation, are weighing on activity. And the supportive budgetary policies put in place during the COVID-19 pandemic and then the inflation peak, particularly on energy, are gradually disappearing in all countries.

The fight against inflation nevertheless seems to be bearing fruit in the richest countries: the latter should return to 2.6% this year, or 0.4 percentage points less than the October estimate, before reaching the target of 2% in 2025.

But the situation should be different in the rest of the world, where inflation is slowing less quickly, and even more slowly than expected three months ago, to remain at 8.1% this year, or 0.3 percentage points. higher than expected in October.

This increase, however, is primarily explained by the surge in inflation in Argentina, which is expected to reach around 150% this year, after 2023 at 211%.

Disparity between economies

The fight against inflation and external shocks do not weigh in the same way from one country to another.

The United States should thus, once again, experience growth above 2% (2.1%), an important data for outgoing President Joe Biden, in the middle of an election year and when the economy will be one of the major themes of the campaign.

The world’s leading power, long expected to be in recession, finally ended the year strong, with growth of 2.5%.

Conversely, the euro zone should not exceed 1% (0.9%) of growth, once again weighed down by Germany, whose economy will continue to slow down (0.5% expected) , with a fairly significant correction compared to the last estimate (-0.4 percentage points).

“The euro zone suffered a significantly stronger shock than the United States, being directly exposed to the Russian invasion of Ukraine and the rise in oil prices, in particular”, Germany having been particularly affected, said underlined Mr. Gourinchas.

If Italy should do barely better than Germany (0.7% in 2024), France and especially Spain can hope for better, respectively 1% and 1.5% growth for the current year, while, outside the European Union, the United Kingdom should continue to struggle (0.6%).

As for emerging countries, growth forecasts for the Chinese economy are improving (4.6% compared to 4.2% initially expected) despite an economic climate that remains complicated, while there is a persistent risk of deflation in the country. .

“The revision concerning China was not as significant as we envisaged, due to the difficulties in the real estate sector and despite significant budgetary support from the authorities,” the IMF chief economist had underlined the day before.

India, for its part, should continue to experience growth above 6% (at 6.5%), while the main Latin American economies benefit from stronger than anticipated domestic demand which gives them hope good performance.

The only exception is Argentina, which has seen its forecasts largely revised (-5.6 percentage points) and is now expected to be in recession (-2.8%) this year, while the October forecasts were for growth of 2.8%.

“It is a significant downward adjustment,” acknowledged Mr. Gourinchas, but “there should be a strong rebound in growth, which will reach around 5%” in 2025.

Russia is on its side, as in 2023, the country seeing its forecasts improve the most, with a correction of +1.5 percentage points compared to October, and growth expected at 2.6%, still supported by the volume of public spending, particularly military.


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