IMF projects global growth to slow to 2.9% in 2024 amid economic slowdown | Mint
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Business News/ Economy / IMF projects global growth to slow to 2.9% in 2024 amid economic slowdown
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IMF projects global growth to slow to 2.9% in 2024 amid economic slowdown

The IMF's baseline forecast indicates a slowdown in global growth from 3.5% in 2022, to 3% in 2023, and 2.9% in 2024, falling below the historical average of 3.8% recorded between 2000-2019.

File Image: Shekou Port in southern China's Guangdong Province (Photographer: Paul Hilton/Bloomberg News)Premium
File Image: Shekou Port in southern China's Guangdong Province (Photographer: Paul Hilton/Bloomberg News)

The International Monetary Fund (IMF) has released its latest economic projections, stating that global growth is expected to remain at 3 percent in 2023 and further decline to 2.9 percent in 2024, as per an ANI report. This marks one of the lowest growth rates in decades.

Global View

According to the IMF's "Navigating Global Divergences" report for October 2023, substantial economic recovery on a global scale faces significant challenges. The baseline forecast indicates a slowdown in global growth from 3.5 percent in 2022, to 3 percent in 2023, and 2.9 percent in 2024, falling below the historical average of 3.8 percent recorded between 2000 and 2019.

Advanced economies are also expected to experience a decline, dropping from 2.6 percent growth in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024. This is attributed to policy tightening aimed at curbing inflation.

Emerging markets and developing economies are likely to witness a slight decrease in growth from 4.1 percent in 2022 to 4 percent in both 2023 and 2024.

Inflation Trends

The report highlights that global inflation is expected to gradually decrease, declining from 8.7 percent in 2022, to 6.9 percent in 2023, and 5.8 percent in 2024. Tighter monetary policies and lower international commodity prices contribute to this decline.

However, core inflation is projected to decrease at a slower pace, with a return to target inflation not expected until 2025 in most cases.

The IMF emphasizes the importance of focusing on monetary policy actions and frameworks to anchor inflation expectations. Effective communication strategies among various stakeholders are also crucial in managing inflation expectations.

The report raises concerns about potential disruptions to global trade in commodities due to increasing worries about geo-economic fragmentation. It highlights the potential impact of such disruptions on commodity prices, economic activity, and the green energy transition.

Ongoing Challenges and Risks

Despite the relative resilience displayed in the global economy, particularly in earlier recovery stages, economic activity still lags behind pre-pandemic levels, especially in emerging market and developing economies, with disparities between regions widening.

Several factors continue to hinder a robust recovery, including the persistent effects of the pandemic, the Ukraine conflict, geo-economic fragmentation, cyclical factors related to monetary policy tightening, withdrawal of fiscal support, and extreme weather events. While the likelihood of a hard landing has decreased, risks to global growth persist.

China's property sector crisis and its potential spill-over effects on commodity exporters are of particular concern. Rising near-term inflation expectations and tight labor markets could lead to core inflation pressures requiring higher-than-expected policy rates. Climate and geopolitical shocks also pose risks, potentially resulting in food and energy price spikes.

The IMF suggests that effective policies, coordination, and structural reforms are essential to successfully navigate these challenges and achieve a robust and sustainable recovery.

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Published: 30 Oct 2023, 11:08 AM IST
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