IMF Upgrades China, India, Europe; Lowers US, Japan Expectations

Pierre-Olivier Gourinchas, Chief Economist of the International Monetary Fund (IMF), speaks at a news conference on April 16, 2024, in Washington. On Tuesday, July 16, 2024, the IMF issues an u

The International Monetary Fund (IMF) has revised its economic projections for various countries, with upgrades for China, India, and Europe, while slightly lowering expectations for the United States and Japan. The IMF noted that global progress against rising prices has been hindered by persistent inflation in services such as airline travel and restaurant meals.

Despite these challenges, the IMF maintains its forecast for lackluster global economic growth of 3.2% for this year, unchanged from its previous estimate in April. This figure represents a slight decline from the 3.3% growth seen in 2023, before the onset of the pandemic.

China and India are expected to be key drivers of global growth in 2024, accounting for nearly half of the total growth. The IMF upgraded China's growth forecast to 5% for this year, citing a surge in Chinese exports. However, the Chinese economy recently reported a slower-than-expected growth rate of 4.7% in the second quarter, down from 5.3% in the previous quarter.

China and India to drive nearly half of global growth.

IMF maintains global growth forecast at 3.2% for 2024.

China's growth forecast upgraded to 5%, driven by exports.

India's economy is projected to expand by 7% this year, up from the previous estimate of 6.8%, driven in part by increased consumer spending in rural areas.

Europe has shown signs of recovery, with the IMF raising its growth forecast for the eurozone to 0.9% for 2024. This improvement comes after the region faced economic challenges following Russia's invasion of Ukraine in 2022.

On the other hand, the IMF downgraded its growth forecast for the United States to 2.6% for this year, citing a weak first quarter. Japan also saw a reduction in its growth outlook to 0.7% for 2024, impacted by disruptions in the automobile industry.

Global inflation, which surged to 8.7% in 2022, is expected to ease gradually, dropping to 5.9% in 2024 and further to 4.4% in 2025. However, the IMF warned that persistent services inflation could lead some central banks to maintain higher interest rates, potentially slowing global growth.

While inflation has decreased from its peak, challenges remain in returning to pre-pandemic levels, according to the IMF's chief economist.