Business Day (Nigeria)

IMF: Outlook for world economy is brighter

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THE Internatio­nal Monetary Fund has upgraded its outlook for the global economy this year, saying the world appears headed for a “soft landing” — reining in inflation without much economic pain and producing steady if modest growth.

The IMF now envisions 3.2% worldwide expansion this year, up a tick from the 3.1% it had predicted in January and matching 2023’s pace. And it foresees a third straight year of 3.2% growth in 2025.

In its latest outlook, the IMF, a 190-country lending organizati­on, notes that the global expansion is being powered by unexpected­ly strong growth in the United States, the world’s largest economy. The IMF expects the U.S. economy to grow 2.7% this year, an upgrade from the 2.1% it had predicted in January and faster than a solid 2.5% expansion in 2023.

Though sharp price increases remain an obstacle across the world, the IMF foresees global inflation tumbling from 6.8% last year to 5.9% in 2024 and 4.5% next year. In the world’s advanced economies alone, the organizati­on envisions inflation falling from 4.6% in 2023 to 2.6% this year and 2% in 2025, brought down by the effects of higher interest rates.

The Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England have all sharply raised rates with the aim of slowing inflation to around 2%. In the United States, year-over-year inflation has plummeted from a peak of 9.1% in the summer of 2022 to 3.5%. Still, U.S. inflation remains persistent­ly above the Fed’s target level, which will likely delay any rate cuts by the U.S. central bank.

Globally, higher borrowing rates had been widely expected to cause severe economic pain — even a recession — including in the United States. But it hasn’t happened. Growth and hiring have endured even as inflation has decelerate­d.

“The global economy continues to display remarkable resilience,’’ Pierre-olivier Gourinchas, the IMF’S chief economist, told reporters. -AP

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