Global: IMF predicts a soft landing for the world economy
2024-02-01
■ The IMF has raised its global economic growth expectations, lowered its inflation rate expectations, and predicted an economic soft landing.
■ The key to the future economic path lies in the premise of the economic soft-landing scenario - how the slowdown of high inflation will evolve.
The International Monetary Fund (IMF) released its latest global economic outlook on the 30th. This release is a mid-term revision of the outlook released in October last year, only updating the outlook for the past two years in 2024 and 2025.
The global economic growth rate increased from 2.9% in October last year to 3.1% in 2024, while it remained at 3.2% in October last year in 2025. In the outlook for October last year, it was expected that there would be a slowdown in growth in 2024 compared to the previous year, but this expectation has been changed to maintain the same level of growth. From a regional perspective, factors such as the strong US economy (1.5% → 2.1%) and strengthened policy support from China (4.2% → 4.6%) have led to an upward adjustment in the outlook, and it is expected that both countries will avoid a sharp slowdown in growth. However, the outlook for the economic downturn in the Eurozone (2024: 1.2% → 0.9%, 2025: 1.8% → 1.7%) has been lowered before 2025 and is still expected to be low growth below 1% in 2024.
This revision ensures the resistance to the slowdown of global economic growth in 2024, and although growth accelerates in 2025, the magnitude is relatively small. However, the growth rate will continue to be lower than the average level from 2000 to 2019, and the outlook for trade volume (2024: 3.3% growth, 2025: 3.6% growth) will also be lowered around 2025 due to export restrictions on strategic goods, economic sanctions, and other reasons. It is expected that economic growth will be slow. In addition, the inflation rate (consumer prices, 2024: 5.8%, 2025: 4.4%) has been lowered in the 2025 outlook, especially in developed countries where inflation is more likely to slow down. The IMF has been raising growth rates and lowering inflation rates since October last year increasing the likelihood of a soft landing for the world economy. The risk balance for the outlook has also been lowered compared to October last year, and is rated as balanced up and down. While increasing awareness of upward risks, concerns are expressed about factors such as a faster-than-expected decline in fuel prices and a slower reduction in fiscal aid.
It is expected that the slowdown in growth in the first half of 2024 will be mainly at a slow pace, and a recovery will begin in the second half of the year. Behind this main scenario is that with the advancement of inflation suppression, the space for policy adjustment is gradually emerging to cope with the rapid changes in the economic environment. If prices rise more than expected, policy space will decrease and it is expected to constrain economic growth. The alleviation path of high inflation is the fundamental premise of the economic soft-landing plan, which will influence the economic trend in the future.4
■ The key to the future economic path lies in the premise of the economic soft-landing scenario - how the slowdown of high inflation will evolve.
The International Monetary Fund (IMF) released its latest global economic outlook on the 30th. This release is a mid-term revision of the outlook released in October last year, only updating the outlook for the past two years in 2024 and 2025.
The global economic growth rate increased from 2.9% in October last year to 3.1% in 2024, while it remained at 3.2% in October last year in 2025. In the outlook for October last year, it was expected that there would be a slowdown in growth in 2024 compared to the previous year, but this expectation has been changed to maintain the same level of growth. From a regional perspective, factors such as the strong US economy (1.5% → 2.1%) and strengthened policy support from China (4.2% → 4.6%) have led to an upward adjustment in the outlook, and it is expected that both countries will avoid a sharp slowdown in growth. However, the outlook for the economic downturn in the Eurozone (2024: 1.2% → 0.9%, 2025: 1.8% → 1.7%) has been lowered before 2025 and is still expected to be low growth below 1% in 2024.
This revision ensures the resistance to the slowdown of global economic growth in 2024, and although growth accelerates in 2025, the magnitude is relatively small. However, the growth rate will continue to be lower than the average level from 2000 to 2019, and the outlook for trade volume (2024: 3.3% growth, 2025: 3.6% growth) will also be lowered around 2025 due to export restrictions on strategic goods, economic sanctions, and other reasons. It is expected that economic growth will be slow. In addition, the inflation rate (consumer prices, 2024: 5.8%, 2025: 4.4%) has been lowered in the 2025 outlook, especially in developed countries where inflation is more likely to slow down. The IMF has been raising growth rates and lowering inflation rates since October last year increasing the likelihood of a soft landing for the world economy. The risk balance for the outlook has also been lowered compared to October last year, and is rated as balanced up and down. While increasing awareness of upward risks, concerns are expressed about factors such as a faster-than-expected decline in fuel prices and a slower reduction in fiscal aid.
It is expected that the slowdown in growth in the first half of 2024 will be mainly at a slow pace, and a recovery will begin in the second half of the year. Behind this main scenario is that with the advancement of inflation suppression, the space for policy adjustment is gradually emerging to cope with the rapid changes in the economic environment. If prices rise more than expected, policy space will decrease and it is expected to constrain economic growth. The alleviation path of high inflation is the fundamental premise of the economic soft-landing plan, which will influence the economic trend in the future.4