The International Monetary Fund on Tuesday improved its economic outlook for this year for China, India and Europe, and modestly lowered its expectations for the United States and Japan.
However, he noted that global progress against accelerating prices has been slowed by a more persistent inflation than expected in the service area, from air travel to restaurant meals.
Overall, the IMF expects that the world economy will grow only 3.2% this year, unchanged from the April forecast, and slightly below the 3.3% growth in 2023.
“Global growth remains stable,” Pierre-Olivier Gourinchas, chief economist at the IMF, told reporters.
Still, the expansion of the global economy remains paltry by recent historical standards. From 2000 to 2019, before the pandemic upended economic activity, global growth averaged 3.8% per year.
The IMF, a lending organization made up of 190 nations, works to promote economic growth and financial stability, in addition to reducing global poverty.
Gourinchas estimated that China and India would account for nearly half of global growth this year.
Partly due to a surge in Chinese exports in early 2024, the IMF raised its growth forecast for China this year to 5%, up from 4.6% in April, but still down from 5.2% in 2023.
The IMF forecast was released before Beijing reported on Monday that China’s economy, the world’s second-largest after the United States, grew at a slower-than-expected 4.7 percent from April to June, down from 5.3 percent in the first quarter of the year.
China’s economy, which once grew steadily at a double-digit annual pace, faces significant challenges, notably a slumping property market and an aging population that has left the country with a labor shortage. By 2029, Gourinchas wrote, China’s growth will slow to 3.3%.
It is predicted that the Indian economy expand 7%, above the 6.8% that the IMF forecast in April, partly due to higher consumer spending in rural areas.
The IMF said “sprouts of recovery have materialized in Europe,” which has been hit by high energy prices and other economic damage from Russia’s invasion of Ukraine that began in 2022. Citing a surge in Europe’s services business, the IMF raised its growth forecast for the 20 countries that share the euro by a tenth of a percentage point to 0.9%, compared with its April forecast. In 2023, the eurozone grew 0.5%.
However, a weak first quarter in the United States prompted the IMF to cut its growth forecast for the year to 2.6 percent, down from 2.7 percent in April.
The IMF also cut its growth outlook for Japan in 2024 to 0.7%, down from 0.9% in April and 1.9% in 2023. Japan’s first-quarter growth was disrupted by the closure of a major auto plant, the IMF said.
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