The International Monetary Fund on Tuesday upgraded its forecast for global economic growth, predicting better developments in the US economy and several important emerging economies such as China and India, AFP and Reuters reported, cited by Agerpres.

IMF Chief Economist Pierre-Olivier Gurincha said the new revised World Economic Outlook (WEO) shows a soft landing is not far off, but overall growth and global trade remain below historical averages.

“We find that the global economy continues to show remarkable resilience, and we are now on the last leg of a soft landing, with inflation steadily falling and economic growth continuing. But growth rates remain modest, and there may be turbulence ahead,” Gurinchas said.

The global economy will grow by 3.1% this year, compared with the 2.9% growth forecast in the WEO’s October report, according to updated World Economic Outlook data released on Tuesday.

The growth forecast for 2025 was left unchanged at 3.2%. For comparison, the historical trend for the period 2000-2019 averaged 3.8%.

The IMF predicts stable inflation in 2024 as well, but on the decline

On inflation, the IMF maintained its estimate from October that core inflation would be 5.8% in 2024, but lowered its inflation forecast for 2025 to 4.4% from 4.6% as it estimated in October.

With the exception of Argentina, which is experiencing a burst of inflation, global core inflation will decline, Gurinchas said. As for the world’s major economies, the IMF estimates that US economic growth will be above 2% (2.1%) this year, which is good news for President Joe Biden, given that 2024 is an election year and the economy will be one of the main campaign themes.

Conversely, economic growth in the Eurozone will not exceed 1% (0.9%), again under the influence of Germany, in which case the economy will idle, ahead by only 0.5%.

“We have to remember the scale of the shock that several European countries experienced, starting from 2022. The energy shock, especially in Germany, was very important… However, the German economy has shown an incredible degree of resilience. It recorded weaker indicators than other countries, such as the United States, but the nature of the shock was different,” Gurinchas noted.

Good news for emerging economies

Among developing countries, the IMF revised its forecast for China’s economic growth this year to 4.6% from the 4.2% it had initially estimated. Gurinchas said the revision reflected significant fiscal support from the authorities, as well as a less severe slowdown than initially expected in the real estate sector.

According to the IMF, developing economies are expected to register growth of 4.1% in 2024, while forecasts for developing Europe (the region that includes Romania) have been improved by 0.6 percentage points to 2.8 %, mainly due to better-than-expected growth in Russia amid high military spending related to the war in Ukraine.

According to IMF forecasts, the Russian economy will grow by 2.6% in 2024, which is 1.5 percentage points higher than the October forecast. The fund warned that there could be further revisions to Russia-related figures, as there are question marks over the extent of fiscal stimulus adopted by Moscow.

Overall, Gurinchas says the global outlook reflects a more balanced balance of upside and downside risks, with the risk of wider conflict in the Middle East balanced by the prospect of lower fuel prices helping to lower inflation faster than expected.