The International Monetary Fund (IMF) has forecasted that global economic growth will remain steady at 3.2% in 2024 and 3.3% in 2025. This projection is detailed in the IMF’s latest World Economic Outlook (WEO) Update Report for July 2024, titled “The Global Economy in a Sticky Spot.”
While these figures align with the April 2024 WEO projections, the report notes significant developments beneath the surface. For advanced economies, growth is expected to converge in the upcoming quarters. In the United States, the growth forecast for 2024 has been revised downward to 2.6%, a 0.1 percentage point decrease from the April projection. This adjustment reflects a slower-than-anticipated start to the year, with growth expected to further decelerate to 1.9% in 2025 as the labor market cools, consumption moderates, and fiscal policy tightens gradually.
In the Euro area, a modest growth of 0.9% is anticipated for 2024, following a near-flat performance in 2023. This improvement is attributed to stronger momentum in services and higher-than-expected net exports in the first half of the year.
Emerging markets and developing economies are expected to see an upward revision in growth forecasts, driven by robust activity in Asia, particularly in China and India. China’s growth forecast has been adjusted upward to 5% for 2024, largely due to a rebound in private consumption and strong exports in the first quarter. India’s growth projection has also been increased to 7% for the year.
In Brazil, growth forecasts for 2025 have been revised upward to reflect reconstruction efforts following floods and supportive structural factors, such as accelerated hydrocarbon production. Conversely, growth prospects in the Middle East and Central Asia remain weighed down by oil production cuts and regional conflicts. Saudi Arabia’s 2024 growth forecast has been revised downward by 0.9 percentage points due to extended oil production cuts.
For Sub-Saharan Africa, growth projections have been adjusted downward, primarily due to a 0.2 percentage point reduction in Nigeria’s growth outlook following weaker-than-expected activity in the first quarter of 2023.
Global inflation is expected to decline but will remain higher in emerging markets and developing economies, decreasing more slowly than in advanced economies. However, inflation is already nearing pre-pandemic levels for many emerging market and developing economies, partly due to falling energy prices.
The report highlights that while overall risks to the economic outlook remain balanced, some near-term risks have gained prominence. These include potential inflationary pressures from a lack of progress in services disinflation and renewed trade or geopolitical tensions, which could increase the cost of imported goods.
As output gaps close and inflation recedes, policymakers face the dual challenge of restoring price stability and addressing the legacies of recent crises, such as replenishing lost buffers and sustainably boosting growth. In the near term, this will require careful calibration and sequencing of the policy mix.
