IMF upgrades global economic forecast for 2024 as US economy rebounds, long-term forecast still lowest in decades

The International Monetary Fund (IMF) has upgraded its outlook for the world economy as United States has rebounded to exceed its pre-pandemic growth levels and India’s growth prospects also look promising.

While the IMF projects the world’s economy at large to be resilient, its long-term forecast is the lowest in decades.

Moreover, the IMF has projected China’s economic growth to decline this year and has flagged that much of Europe will have a rather gradual economic recovery compared to that of the United States.

World economy to grow at 3.2%, long-term outlook lowest in decades

In its World Economic Outlook released on Tuesday, the IMF said that the world economy is set to grow at 3.2% in 2024. It was 0.1% higher than the forecast released in January.

The IMF also said that there is only 10% chance of a global recession, which is defined as global growth falling below 2%.

While the annual outlook is upbeat, the IMF’s five-year growth forecast at 3.1% is lowest in decades. The CNBC noted that such an outlook is in part because of weak productivity growth and increasing geopolitical fragmentation in the world.

Writing for Yahoo Finance, Jennifer Schonberger noted that the IMF made its forecast prior to Iran’s attack on Israel over the weekend and highlighted that the IMF warned that the conflict in the Middle East could change the world’s economic trajectory.

US & India show growth, China’s growth falls

The US economic growth is projected to grow this year at 2.7%, which is an upward revision of 0.6% from IMF’s earlier projection.

Among major economies, the US has experienced the strongest rebound which has been helped by rising productivity growth, noted Schonberger.

The IMF also upgraded India’s growth prospects to 6.8% by 30 basis points.

This is in sharp contrast to China where growth is projected to decline to 4.6% this year from last year’s 5.2%.