Team No Comments

Please see below, an update from EPIC Investment Partners analysing the latest global growth forecasts from the International Monetary Fund. Received this morning – 18/04/2024

On Tuesday, the International Monetary Fund (IMF) modestly raised its forecast for global economic growth, describing the world economy as “surprisingly resilient” in the face of inflationary pressures and changes in monetary policy. The IMF now anticipates a global growth rate of 3.2% for 2024, 0.1% higher than its January prediction, with growth in 2025 the same.  

Pierre-Olivier Gourinchas, the IMF’s chief economist, said that despite a string of economic crises, the data pointed towards a soft landing for the global economy, adding that the risks to the outlook remained broadly balanced. “Contrary to pessimistic forecasts, the global economy has demonstrated remarkable resilience, maintaining steady growth with inflation receding almost as rapidly as it escalated”, he noted.  

Leading the growth are advanced economies, notably the U.S., which has surpassed its economic activity from before the Covid-19 pandemic, along with the euro zone, which is showing robust signs of recovery. However, less optimistic prospects in China and other major emerging markets could pose challenges to global trade partners. 

China remains a significant concern due to its faltering property market, along with other potential risks such as geopolitical tensions leading to price surges, trade disputes, varying rates of disinflation among its key sectors, along with high interest rates. 

However, on the upside, looser fiscal policy, falling inflation and advancements in artificial intelligence were cited as potential growth drivers. 

As for inflation, the IMF projects a decrease in global headline inflation from an annual average of 6.8% in 2023 to 5.9% in 2024, and a further fall to 4.5% in 2025. Advanced economies are expected to reach their inflation targets ahead of emerging markets and developing economies. 

“As the global economy approaches a soft landing, the near-term priority for central banks is to ensure that inflation touches down smoothly, by neither easing policies prematurely nor delaying too long and causing target undershoots,” Gourinchas said. 

“At the same time, as central banks take a less restrictive stance, a renewed focus on implementing medium-term fiscal consolidation to rebuild room for budgetary manoeuvre and priority investments, and to ensure debt sustainability, is in order,” he added.

Please continue to check our blog content for the latest advice and planning issues from leading investment firms.

Alex Kitteringham

18th April 2024