The International Monetary Fund has revised its global economic outlook, forecasting a 'soft landing' for the world economy with steady but modest growth and controlled inflation. The IMF now predicts a 3.2% worldwide expansion for 2024, up from the 3.1% forecasted earlier, with a similar pace expected for 2025.
The United States, the largest economy globally, is driving this growth with stronger-than-expected performance. The IMF anticipates a 2.7% growth rate for the U.S. in 2024, an increase from the previous 2.1% projection.
Despite lingering concerns about high inflation rates, the IMF foresees a decline in global inflation from 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025. Advanced economies are also expected to see a decrease in inflation, with rates falling from 4.6% in 2023 to 2.6% in 2024 and 2% in 2025, aided by higher interest rates.
Central banks worldwide, including the Federal Reserve, have raised rates to combat inflation, with the U.S. experiencing a drop in inflation from 9.1% to 3.5%. However, inflation remains above the Fed's target level, delaying potential rate cuts.
Despite concerns, the global economy has shown resilience, with growth and hiring continuing even as inflation moderates. The IMF's chief economist highlighted the economy's ability to achieve a 'soft landing.'
However, challenges persist, including stalled progress in curbing inflation and stubborn price increases in certain sectors like healthcare and auto repairs. The IMF warns that geopolitical tensions and high interest rates could disrupt the economic expansion.
China's economy is expected to slow from 5.2% in 2023 to 4.6% in 2024 and 4.1% in 2025 due to various internal and external factors. Meanwhile, India is projected to outpace China's growth, albeit at a slower rate, and sub-Saharan Africa and Latin America are expected to see gradual growth acceleration.
In conclusion, while the global economy is on track for a 'soft landing' with modest growth, challenges such as inflation, geopolitical tensions, and varying regional economic performances remain key factors influencing the future trajectory of the world economy.
