ASIATODAY.ID, JAKARTA – The January 2024 International Monetary Fund (IMF) World Economic Outlook report, released Tuesday, January 30 2024, projects that global economic growth will reach 3.1% in 2024.
This projection is up 0.2 percentage points from the previous report. Growth projections in 2024 tend to be stagnant compared to 2023, where the IMF estimates the global economy will grow 3.1%. In 2025, the IMF estimates that the global economy will grow by 3.2%.
IMF chief economist Pierre-Olivier Gourinchas said the global economy was starting to enter the final stage towards a soft landing because inflation continued to decline and economic growth remained solid. However, the growth rate is still slow, and turbulence may still occur.
“The global economy is surprisingly resilient. For 2024, the improvement from our October projection is largely due to resilience in the US and several large emerging market and developing countries, coupled with more fiscal support in China,” said Gourinchas.
However, projected global growth in 2024 and 2025 is still below the historical (2000-2019) annual average of 3.8%.
“This reflects tight monetary policy and the withdrawal of fiscal support, as well as the low productivity underlying growth,” said the IMF in its report.
The IMF expects countries to see growth decline in 2024 before picking up in 2025, with a recovery in the eurozone and growth moderating in the US. Emerging market and developing countries are expected to experience stable growth until 2024 and 2025, with differences in each region.
According to Gourinchas, global inflation is expected to fall to 5.8% in 2024 and 4.4% in 2025. The 2025 projection was revised down from previous estimates.
He continued, the risks to global growth are currently balanced. On the positive side, faster disinflation could ease financial conditions, while looser-than-expected fiscal policy could spur growth for a while, albeit at the risk of a more expensive adjustment later.
“Stronger reform momentum can encourage productivity growth with positive impacts,” he continued.
However, Gourinchas warned that downside risks to growth still exist, including the potential for new commodity price spikes due to geopolitical shocks. Persistent inflation, continued weakness in China’s property sector, or a disruptive shift in tax increases and spending cuts. (ATN)
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