IMF keeps global growth rate at 3.2% for 2024 and 2025

Global economic growth is expected to remain around 3.2 per cent in 2024 and 2025 with some minor uptick in some advanced economies, including the United States, according to the latest update of the World Economic Outlook, released by International Monetary Fund (IMF).

For India, the IMF report maintained its earlier growth projection of 7 per cent for 2024 and 6.5 per cent in 2025. For emerging Asian economies as a whole the multilateral lender expects higher growth with growing demand for semiconductors and milestone investments in artificial intelligence.

For China, the report said much will depend on the extent of the recent contraction in economic activity and its effects on consumer sentiment. Given China’s 

role in global production and trade, any extended slowdown of economy could spill over to the global economy, the report stated.

Also, according to the report, disruptions to production and shipment, civil unrest and wars have impacted growth outlook in the Middle East and Central Asia and sub-Saharan Africa. 

The projection of 3.2 per cent global growth in 2024 and 2025, however, includes upward and downward revisions for some major European economies. The US economy seems to be acting as a buffer that offsets the effects of the slowdown in some European countries.

According to the IMF report, there has been a levelling of cyclical imbalances across economies helping to better align global economic activity. This, in turn, is helping global inflation to come down from levels around 6.7 per cent in 2023 to 5.8 per cent in 2024 and to an expected 3.4 per cent in 2025.

The report also says that advanced economies are in a better position to achieve inflation targets earlier than the emerging and developing economies.

Yet, according to the report, global growth would be around 3.1 per cent for the next five years.

IMF has recommended that individual economies should undertake structural and fiscal reforms to ensure a smooth landing.