IMF more optimistic for global economy in 2024, but growth down in Eurozone

Supported by the economy of the United States and certain emerging countries, starting with India and Brazil, the world economy seems well on its way to achieving better performance than expected, estimated Tuesday April 16 , the International Monetary Fund (IMF), which remains cautious for 2025

IMF more optimistic for global economy in 2024, but growth down in Eurozone

Supported by the economy of the United States and certain emerging countries, starting with India and Brazil, the world economy seems well on its way to achieving better performance than expected, estimated Tuesday April 16 , the International Monetary Fund (IMF), which remains cautious for 2025.

The Washington-based institution now expects global growth of 3.2% for 2024, revised slightly up from its January estimate of 3.1%, and the same level for 2025, unchanged compared to its forecasts at the start of the year.

This is the second positive revision of the Fund's expectations, but this expected performance of the global economy would confirm its slowdown in the long term, being at a level significantly lower than the historical trend observed between 2000 and 2019, of 3.8% on average, and even higher than that of the last century.

“Stable” growth in the face of inflation

“The global economy continues to demonstrate remarkable resilience, with growth remaining stable and inflation falling, but many challenges continue to face us,” said IMF Chief Economist Pierre- Olivier Gourinchas, during a press conference.

Since releasing the first version of its World Economic Report (WEO) for this year last October, the IMF has revised its global growth forecast upwards by 0.3%.

Despite rates which remain high and inflation which evolves differently depending on the country – close to the target in Europe and low in China, but still too high in the United States – the solidity of the employment and consumption market allows for the global economy to show a certain reliability.

French growth revised downwards

After a positive revision of 0.6 percentage points (pp) in January, compared to initial forecasts in October, the IMF once again revised, in the same proportion, American growth for this year, which it now expects 2.7%.

“The very solid performance of the United States is the result of growth in its productivity, its labor supply, but also a demand which remains strong and could bring inflation up. This should push the Federal Reserve to take a cautious and gradual approach towards easing” its monetary policy, detailed Mr. Gourinchas.

A trend which, however, is not found in other advanced economies, and in particular in the euro zone, whose growth, already weak, has been revised down slightly, to 0.8% (− 0.1 pp). This is due to the fragility of the region's two leading economies, Germany and France, whose growth is in both cases revised downwards, by 0.3 pp, to 0.2% and 0.7% respectively. .

“Growth is rebounding in the euro zone this year, but we are starting from very low levels,” recalled Pierre-Olivier Gourinchas, “unlike in the United States, there is no sign of the economy overheating. , the European Central Bank (ECB) must now be cautious about its shift towards easing its monetary policy.”

Italy too is expected to continue slowing, also at 0.7%, but Spain is expected to see a significantly more positive trend, up 0.4pp, to 1.9%. Outside the European Union, the United Kingdom is also expected to see its economy remain sluggish, with growth expected at just 0.5% (− 0.1 pp).

Slowdown in the Chinese economy

As for emerging countries, India and Brazil experienced the largest upward revision, respectively at 6.8% and 2.2% anticipated this year. For India, the good performance of domestic demand as well as the increase in the active population will support growth which will be among the highest in the world. As for Brazil, anticipated growth remains lower than in 2023, even if better than initially expected, in particular due to the effects of monetary tightening and ongoing budgetary consolidation.

China, on the other hand, sees its forecast unchanged, with 4.6% growth expected this year, a sign that the slowdown in the Chinese economy continues.

“The Chinese government announced measures to stimulate the economy last month, but weakness in the real estate sector remains persistent, and our approach, taking these two elements into account, is to leave our forecast unchanged” for the Chinese economy, explained Mr. Gourinchas.

As in 2023, the Russian economy should, for its part, remain robust, with a further upward revision of growth, now expected this year at 3.2% (0.6 pp), despite economic sanctions still in place. place, but which remains supported by the volume of public spending, particularly military spending in the context of the war in Ukraine.