IMF Warns of Slow Economic Growth and High Inflation

International Monetary Fund Warns of Slow Economic Growth and High Inflation

The latest World Economic Outlook report from the International Monetary Fund (IMF) has highlighted concerns over slower-than-expected economic growth and persistent high inflation worldwide. These factors pose risks to the global economy, potentially hindering efforts for a soft landing.

The IMF’s report maintains the projection of global output growth at 3.2 percent for 2024, in line with April estimates. However, the outlook for next year is slightly more optimistic, with growth expected to reach 3.3 percent. Despite these figures, the IMF cautions that the global economy is in a precarious position.

Of particular concern is the weakening economic performance of the United States, a key driver of the global recovery post-pandemic. The IMF now anticipates slower growth in the U.S. economy due to subdued consumer spending and a softening job market. The forecast indicates a modest increase in U.S. economic growth to 2.6 percent in 2024, down from the previous estimate of 2.7 percent.

According to Pierre-Olivier Gourinchas, the IMF’s chief economist, “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 highlights ongoing concerns about elevated prices for services. This situation may necessitate central banks to maintain higher interest rates for an extended period, posing risks to economic growth in both advanced and developing economies.