STEADY BUT SHAKY

IMF's latest World Economic Outlook forecasts modest 3.2% global growth, with the US thriving while Europe grapples with inflation

As the world grapples with geopolitical crises and important events like the US elections that impact global markets, the IMF’s latest World Economic Outlook offers valuable insights into key economic indicators and global trends. This edition explores the shifting economic landscape shaped by geopolitical risks, inflationary pressures, and uneven growth. It highlights potential disruptions from China’s property market, rising global inflation, and energy vulnerabilities, all affecting both advanced and emerging economies.

Global economic growth is projected to stabilize but remain modest at 3.2% in both 2024 and 2025, as indicated in the IMF’s October ’24 World Economic Outlook. This forecast aligns closely with previous estimates, suggesting no major acceleration or decline on the horizon.

However, this stability conceals significant variation across individual economies, with some regions experiencing notably slower growth. The IMF report states, “Persistent structural challenges and economic fragmentation will likely inhibit any robust recovery for the foreseeable future.” This outlook reflects ongoing post-pandemic disruptions, inflationary pressures, and a more fragmented global economy.

US ECONOMY SURGES, EUROPE STRUGGLES

In advanced economies, growth forecasts reveal a widening gap between the United States and major European nations. The US growth projection for 2024 has been revised upward to 2.4% from 2.1%, driven by strong consumer demand and investments in AI, semiconductors, and green technology. Resilient labour markets, alongside supportive fiscal and monetary policies, further bolster this momentum.