Crowds march under neon signs on Nanjing Road. The street is the city's main shopping district and one of the busiest in the world.
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The International Monetary Fund on Tuesday slightly raised its global growth forecast, saying the economy had proven “surprisingly resilient” despite inflationary pressures and monetary policy changes.
The IMF now expects global growth of 3.2% in 2024, a modest 0.1 percentage point increase from its previous forecast in January, and in line with growth forecasts for 2023. Growth is then expected to expand at the same 3.2% pace in Year 2025. .
The International Monetary Fund's chief economist, Pierre-Olivier Gourincha, said that the results indicate that the global economy is heading towards a “soft landing”, following a series of economic crises, and that the risks to the outlook are now broadly balanced.
“Despite the bleak outlook, the global economy remains remarkably resilient, with steady growth slowing and inflation almost as quickly as it is rising,” he said in a blog post.
Growth is expected to be led by advanced economies, with the United States already well above its pre-Covid-19 trend, and the Eurozone showing strong signs of recovery. But the report said the bleak outlook in China and other large emerging market economies could impact global trading partners.
China is among the main downside risks
China, whose economy remains weak due to a slumping real estate market, has been cited among a series of potential downside risks facing the global economy. They also included price increases resulting from geopolitical concerns, trade tensions, divergences in disinflation paths between major economies, and prolonged high interest rates.
On the upside, looser fiscal policy, lower inflation, and advances in artificial intelligence have been cited as potential drivers of growth.
Central banks are now being closely watched for a signal on the future path of inflation, with differing views on both sides of the Atlantic on when the Federal Reserve and European Central Bank will cut interest rates. Some analysts recently predicted a possible interest rate hike by the Federal Reserve, as stubborn inflation and escalating tensions in the Middle East weigh on economic sentiment.
The International Monetary Fund said it expects global headline inflation to decline from an annual average of 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced economies returning to inflation targets sooner than emerging market economies and economies. Developing.
“With the global economy on the verge of a soft landing, the near-term priority for central banks is to ensure that inflation falls smoothly, by not easing policies prematurely or delaying them for too long and causing targets to be underachieved,” Gorinchas said.
“At the same time, with central banks taking a less restrictive stance, a renewed focus on implementing medium-term fiscal consolidation to rebuild room for budgetary maneuver and priority investments, and to ensure debt sustainability, is in order,” he added.
Despite Tuesday's more optimistic forecast, global growth remains low by historical standards, partly due to weak productivity growth and increasing geopolitical fragmentation. The International Monetary Fund's five-year forecast expects global growth to reach 3.1%, its lowest level in decades.
