News Digest: IMF: U.S. Economy to Drive Global Growth Through 2025
October 26, 2024
News Digest:
The International Monetary Fund (IMF) has projected that the U.S. economy will remain the primary engine of global growth through the remainder of 2024 and into 2025, fueled by resilient consumer spending despite high inflation and elevated interest rates.
In its latest World Economic Outlook report, the IMF upgraded US growth forecasts for both 2024 and 2025, marking it as the only developed economy to receive upward revisions for both years. The IMF’s chief economist noted that the U.S. Federal Reserve’s efforts to engineer a “soft landing”—where inflation is brought down without significantly harming employment—have largely succeeded.
Among emerging economies, India and Brazil were highlighted for their strong growth prospects. In contrast, China’s forecast for 2024 was downgraded, with the IMF maintaining a below-trend growth estimate of 4.5% for 2025, reflecting economic challenges such as slowing exports and a cooling property market.
While the IMF struck an optimistic tone for the U.S. and several emerging markets, it warned that significant risks could disrupt global recovery. These include:
● Geopolitical conflicts, such as armed wars that could further strain economic cooperation.
● Potential trade wars, with protectionist policies threatening cross-border trade.
● The lingering impact of tight monetary policies, as central banks, including the Fed, have raised rates to combat inflation, potentially stifling growth in more fragile economies.