Crowds of people walk under the neon lights of Nanjing Road. The street is the city’s main shopping area and one of the busiest in the world.
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The International Monetary Fund slightly raised its global growth forecast on Tuesday, saying the economy had proven “astonishingly resilient” despite inflationary pressures and shifts in monetary policy.
The International Monetary Fund currently expects global economic growth to be 3.2% in 2024, a slight increase of 0.1 percentage point from its earlier forecast in January, consistent with its 2023 growth forecast. growth rate.
Pierre Olivier Gurinchas, chief economist of the International Monetary Fund, said the survey results showed that the global economy was heading for a “soft landing” after a series of economic crises and that risks to the outlook were now basically balanced.
“Despite the pessimistic forecasts, the global economy remains remarkably resilient, with growth stable and inflation slowing almost as fast as it is rising,” he said in a blog post.
Growth will be led by developed economies, with the United States already exceeding pre-Covid-19 pandemic trends and the euro area also showing signs of strong recovery. But the bleak outlook for China and other large emerging market economies could put pressure on global trading partners, the report said.
China is one of the major downside risks
China’s economy continues to weaken due to the sluggish real estate market and has been listed as one of a series of potential downside risks facing the global economy. Geopolitical concerns, trade tensions, diverging deflation paths across major economies and price spikes triggered by prolonged high interest rates are also included.
On the bright side, loose fiscal policy, falling inflation and advances in artificial intelligence are cited as potential growth drivers.
Central banks are being closely watched for signals on the future path of inflation, with opinions on both sides of the Atlantic divided over when the Federal Reserve and the European Central Bank will cut interest rates. Some analysts have recently predicted that the Federal Reserve may raise interest rates as stubborn inflation and rising tensions in the Middle East weigh on economic confidence.
The International Monetary Fund said it expects overall global inflation to fall from an average annual rate of 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with developed economies declining earlier than emerging market and developing economies. Restore inflation target.
“With the global economy approaching a soft landing, central bankers’ near-term priority is to ensure that inflation falls smoothly, without easing policy too early or delaying it for so long that the target is not met,” Gurinchas said.
“At the same time, as the central bank adopts a less restrictive stance, there is a renewed focus on implementing medium-term fiscal consolidation to rebuild room for budgetary maneuver and prioritize investment, and ensure debt sustainability,” he added.
Despite Tuesday’s brighter outlook, global economic growth remains low by historical standards, in part due to weak productivity growth and growing geopolitical divisions. The International Monetary Fund predicts global five-year growth of 3.1%, the lowest level in decades.
