IMF sees global growth limping along at 3% this year

The International Monetary Fund (IMF) on Tuesday projected global economic growth to come in at 3 per cent this year, the same as its last forecast in July.

For 2024, the Washington-based lender revised its estimate slightly downwards, from 3 per cent to 2.9 per cent.

The IMF described the global economy as still limping along, in spite of the challenges ranging from high inflation and tight monetary policy, to Russia’s war on Ukraine and extreme weather events.

The slowdown is more pronounced in the industrialised world than in developing countries, the IMF said as it issued its latest World Economic Outlook.

In 2022, as COVID-19’s health and economic consequences began to wane, the global economy grew by 3.5 per cent.

Inflation, which is still elevated in many countries although below the historic highs of earlier in 2023 remained a major factor affecting growth.

“In spite of signs of resilience earlier in 2023, the impact of policy tightening to reduce inflation is expected to cool economic activity going forward,’’ the IMF said.

The world’s top two economies would see varying fortunes in the coming year, the IMF predicted.

The U.S. is growing more strongly than expected, with growth this year revised upwards by 0.3 percentage points to 2.1 per cent.

In 2024, GDP is expected to grow by 1.5 per cent, again more than expected, thanks partly to robust consumption and investment.

China on the other hand saw its growth forecast revised downwards.

This year, the Chinese economy is expected to grow by 5 per cent, 0.2 percentage points lower than the earlier forecast.

Next year, growth is projected to be 4.2 per cent to 0.3 percentage points lower.

The crisis in China’s real estate sector was not only a domestic financial problem, but also poses a risk to the global economy, the IMF said.

China’s credit-driven real estate growth model had to change, the IMF argued.

Russia’s invasion of Ukraine posed an ongoing risk to the global economy, according to the IMF.

It had caused major commodity markets to fragment, and geopolitical tensions could make matters worse.