Global Economy Projected to Grow at 3.2% in 2024 and 2025, Says IMF

The International Monetary Fund (IMF) has released its latest World Economic Outlook (WEO) report, forecasting global economic growth of 3.2% in both 2024 and 2025. This is an upward revision from the IMF's April 2024 forecast of 3.0% for 2024 and 2.9% for 2025.

The upward revision is due to stronger-than-expected growth in the first half of 2024, particularly in the United States and India. However, the IMF warns that the global economy faces a number of downside risks, including:

Geopolitical tensions: The war in Ukraine and other geopolitical tensions could continue to disrupt supply chains and drive up energy prices.

Trade fragmentation: Rising protectionism and trade tensions could weigh on global trade and investment.

Tightening financial conditions: Central banks around the world are raising interest rates to combat inflation, which could slow economic growth.

Climate-related disasters: Extreme weather events could damage property and infrastructure and disrupt economic activity.

The IMF also notes that the global economy is facing a number of longer-term challenges, such as:

Declining productivity growth: Productivity growth has been slowing down for many years, and this trend is expected to continue. This could put a damper on long-term economic growth.

Rising inequality: Inequality is on the rise in many countries, which could lead to social and political instability.

Climate change: Climate change is a major threat to the global economy, and the costs of inaction will only grow over time.

Despite these challenges, the IMF is cautiously optimistic about the global economic outlook. The Fund expects growth to pick up in 2025, as the benefits of tighter financial conditions and stronger labor markets outweigh the headwinds from geopolitical tensions and trade fragmentation.