IMF Estimates 3.1% Global Economic Growth for 2024

The International Monetary (IMF) says global growth is projected at 3.1 per cent in 2024 and 3.2 per cent in 2025. This is according to the IMF’s latest World Economic Outlook (WEO) Update Report for January 2024: “Moderating Inflation and Steady Growth Open Path to Soft Landing” released on Tuesday in South Africa.

The report said the 2024 forecast was 0.2 percentage points higher than the October projections of the 2023 WEO. It said this was on account of greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China.

“The forecast for 2024–25 is, however, below the historical (2000–19) average of 3.8 per cent. With elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth.”

The report showed growth in Sub-Saharan Africa was projected at 3.8 in 2024 and 4.1 in 2025. It revealed that economic growth in Nigeria is projected at 3.0 in 2024 and 3.1 in 2025.

The report said inflation was falling faster than expected in most regions, amid unwinding supply-side issues and restrictive monetary policy. It said global headline inflation was expected to fall to 5.8 per cent in 2024 and to 4.4 per cent in 2025, with the 2025 forecast revised down.

The report said with disinflation and steady growth, the likelihood of a hard landing had receded, and risks to global growth were broadly balanced. “On the upside, faster disinflation could lead to further easing of financial conditions. Looser fiscal policy than necessary and then assumed in the projections could imply temporarily higher growth but at the risk of a more costly adjustment later on.

” On the downside, new commodity price spikes from geopolitical shocks including continued attacks in the Red Sea and supply disruptions or more persistent underlying inflation could prolong tight monetary conditions.

”Deepening property sector woes in China or, elsewhere, a disruptive turn to tax hikes and spending cuts could also cause growth disappointments”.

The report stated that policymakers’ near-term challenge was to successfully manage the final descent of inflation to target, calibrating monetary policy in response to underlying inflation dynamics.

“At the same time, in many cases, with inflation declining and economies better able to absorb the effects of fiscal tightening, a renewed focus on fiscal consolidation to rebuild budgetary capacity to deal with future shocks is needed.

“There is also the need to raise revenue for new spending priorities and curb the rise of public debt. Targeted and carefully sequenced structural reforms would reinforce productivity growth and debt sustainability and accelerate convergence toward higher income levels.

“More efficient multilateral coordination is needed for, among other things, debt resolution, to avoid debt distress and create space for necessary investments, as well as to mitigate the effects of climate change.”