The United States economy is growing more slowly than expected and inflation remains stubbornly high around the world, posing risks to the global economy, according to the latest International Monetary Fund (IMF) report.
The IMF’s most recent World Economic Outlook report highlighted the lingering vulnerabilities that could disrupt the global economy’s progress. The report emphasized the importance of avoiding a global recession despite efforts by central banks to control inflation by raising interest rates.
The IMF’s projections indicate that global output growth is expected to remain at 3.2 percent in 2024, unchanged from the April forecast, with a slight increase to 3.3 percent in the following year. However, the report cautioned that the global economy is currently facing challenges and described it as being in a “sticky spot.”
Noteworthy concerns include signs of weakness in the United States, a key player in the global economic recovery post-pandemic. The IMF revised its growth expectations for the U.S. economy downward due to weakened consumer spending and a softening job market. The forecast now projects a 2.6 percent growth rate in 2024, slightly lower than the previous estimate of 2.7 percent.
IMF’s Chief Economist, Pierre-Olivier Gourinchas, mentioned that “The United States shows increasing signs of cooling, especially in the labor market, after a strong 2023.”
While global inflation is expected to decrease to 5.9 percent in 2024 from 6.7 percent in 2023, the IMF highlighted that prices for services remain high. This situation may lead central banks, which have raised interest rates significantly, to maintain elevated borrowing costs for a longer period. Such a scenario could jeopardize growth prospects for both advanced and developing economies.
