IMF forecasts 3.2% global growth in 2024 amid inflation concerns

The International Monetary Fund (IMF) has maintained its forecast of 3.2% global economic growth for 2024, aligning with prior estimates.

However, the 2025 growth prediction has been revised upward to 3.3%, reflecting cautious optimism for the future.

These forecasts come amid varied regional economic performances and ongoing inflation concerns, highlighting the complexities of the global economic landscape.

Regional economic forecasts

United States and Europe: The IMF has slightly downgraded its growth forecast for the United States to 2.6% in 2024, down from 2.7%, citing a slower-than-expected start to the year.

In Europe, the Eurozone is expected to grow at a faster rate of 0.9%, while Germany’s growth remains steady at 0.2%. The UK’s growth forecast has been revised upward to 0.7%, up from 0.5%, indicating a modest improvement.

Asia: Asia presents a mixed economic outlook. China’s GDP growth forecast has been increased to 5% from 4.6%, while India’s growth projection has been raised to 7% from 6.8%.

In contrast, Japan’s GDP growth is expected to decrease to 0.7% from 0.9%, indicating a more moderate expansion rate.

Inflation concerns and monetary policy implications

The IMF warns that service inflation is hindering efforts to achieve disinflation, posing challenges for monetary policy normalization.

This scenario complicates the economic environment and raises concerns about prolonged periods of high interest rates, especially amid escalating trade tensions and increased global policy uncertainty.

The IMF maintains its April forecast for the Latin American and Caribbean region, which has shown remarkable resilience in the face of recent global crises.

Despite growth slowing from 2.3% in 2023 to 2.0% in 2024, most economies are performing close to their potential. This slowdown is attributed to a deteriorating external environment and the ongoing impact of restrictive policies aimed at reducing inflation.

Inflation in the region is falling due to appropriate measures taken by regional central banks and global disinflationary trends. As inflationary pressures decrease, monetary policy easing can continue, balancing the goal of permanently reducing inflation with the need to avoid excessive economic contraction.

Fiscal policy should focus on accelerating consolidation measures to restore policy space by generating revenue while protecting essential social expenditures that promote social cohesion.

Given that poverty and inequality remain high in the region, it is crucial to boost potential growth, which currently averages around 2.5% and lags behind comparable economies.

Structural reforms to enhance growth should prioritize strengthening the rule of law, improving the business environment, increasing labor force participation—particularly among women—and addressing informality. Combating crime and violence can also yield significant social and economic benefits.

While the IMF’s forecasts indicate resilience in the global economy, widespread concerns about inflation and monetary policy highlight the need for vigilance and proactive measures to address potential challenges and uncertainties in the economic landscape. As regions navigate these complexities, the focus remains on sustaining growth, managing inflation, and implementing structural reforms to ensure long-term stability and prosperity.