IMF raises forecast for global growth in 2024 to 3.1%

The International Monetary Fund (IMF) on Tuesday said that it has improved its forecast for global economic growth in the coming year.

According to the News Agency of Nigeria (NAN), the IMF forecast, however, raised its expectations to 3.1 percent from an earlier forecast of 2.9 percent in October and expects growth of 3.2 percent in 2025.

“The clouds are beginning to part,” wrote IMF Chief Economist, Pierre-Olivier Gourinchas, in a blog entry, noting that inflation was declining and growth “holding up.”

But in order to achieve these goals, such as sustainable growth and greater prosperity, the pace of expansion must pick up, the IMF economist emphasised.

The IMF increased its 2024 growth forecast for the United States from 1.5 percent in October to 2.1 percent.

This would nonetheless be a slight slowdown for the world’s biggest economy, which grew by an estimated 2.5 percent in 2023.

The IMF took a dimmer view of prospects for Germany, lowering its growth forecast for Europe’s largest economy to just 0.5 percent for 2024.

The IMF had forecast 2024 growth of 0.9 percent in Germany back in October.

For Germany, the IMF now predicts that economic growth will rebound to 1.6 percent in 2025. That, however, is 0.4 percentage points less than in the October forecast.

The IMF also expects the U.S. economy to cool down to 1.7 percent growth in 2025.

Globally, the IMF sees geopolitical tensions, particularly in the Middle East, as a risk to growth.

Gourinchas pointed out that the attacks by the militant Islamist Houthi militia on freighters in the Red Sea, a key shipping corridor leading to the Suez Canal, have already led to a significant increase in prices for freight shipments between Asia and Europe.

The IMF forecast found that new software based on artificial intelligence could lead to higher labour productivity and income in the medium term.

While at the same time, the IMF’s experts believe that AI-based productivity growth will be felt more quickly in wealthy developed economies.