IMF Alters Inflation Forecast, Boosts US Growth Outlook

The International Monetary Fund (IMF) has revised its global inflation forecast for next year and called on central banks to maintain tight policies until there is a sustained easing of price pressures.

The IMF raised its forecast for global consumer price growth to 5.8 per cent for next year in its World Economic Outlook released on Tuesday. The previous projection published by the IMF three months ago predicted inflation of 5.2 per cent. Moreover, the forecast for economic growth in 2024 dropped, as reported by Bloomberg.

In its latest world economic forecast, which predates the Hamas attack on Israel and the war’s onset, the IMF projected that global economic growth for this year would reach three percent. This expectation aligns with the previous forecast, as stronger-than-expected growth in the US offsets the decline in the outlook for the EU and China.

Regarding the forecast of global economic growth in 2024, the IMF reduced the forecast by 0.1 per cent to 2.9 per cent, as reported by CNN. The IMF’s forecast suggests that fears of a global recession resulting from the war in Ukraine and the cost of living crisis will prove unfounded.

IMF: Stronger growth expected in the US

It is expected that the countries of the Eurozone will achieve collective growth of 0.7 per cent this year and 1.2 per cent next year. This is a drop of 0.2 and 0.3 per cent, compared to the previous pred from July. The IMF stated that growth in China should be five per cent this year and 4.2 per cent next year, which is 0.2 and 0.3 per cent less than the previous forecast.

However, the report cautioned that the turmoil in China’s real estate sector might receive a boost, leading to global repercussions, particularly impacting commodity-exporting countries. In contrast, the IMF expects stronger growth in the US this year and next. The financial institution revised its growth projection for the US economy by 2.1 per cent in 2023 and 1.5 per cent in 2024, a boost of 0.3 and 0.5 per cent.