IMF cuts 2024 global growth forecast, flagging "slow and uneven" recovery

Investing.com -- The International Monetary Fund has maintained its global growth forecast for 2023, but slashed its projection for next year, predicting a "slow and uneven" recovery for the world economy from the COVID-19 pandemic and the outbreak of the war in Ukraine.

In its latest World Economic Outlook report, the IMF kept its forecast for global real gross domestic product growth this year of 3.0%. However, the estimate for 2024 was lowered to 2.9%, down 0.1 percentage point versus the organization's prior update in July. Global output registered 3.5% in 2022.

"Despite economic resilience earlier this year, with a reopening rebound and progress in reducing inflation from last year’s peaks, it is too soon to take comfort," the IMF said in a statement.

It added that economic activity is still falling short of its "prepandemic path," particularly in emerging markets and developing economies. Much of this is due to the impact of a surge in monetary policy tightening to corral inflation, as well as the long-term consequences of COVID-19, the Ukraine turmoil and "increasing geoeconomic fragmentation," the IMF noted.

Speaking to reporters, IMF Chief Economist Pierre-Olivier Gourinchas said that most forecasts suggest a so-called "soft landing," or a cooling of inflationary pressures without causing a broader meltdown in growth, for the global economy. But he flagged lingering concerns over a real estate crisis in China and volatility in commodity prices.

On a country-specific level, the IMF improved its forecast for growth in the United States by 0.3 percentage points to 2.1% for 2023 and by 0.5 percentage points to 1.5% next year. It said this was linked to stronger business investment and rising consumption in the world's largest economy.

But estimates for expansion in China were slashed by 0.2 percentage points to 5.0% in 2023 and by 0.3 percentage points to 4.2% in 2024, largely because of the country's property sector issues and weak external demand. Forecasts for growth in the Eurozone were also cut.

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