The News
The International Monetary Fund has lowered its forecast for China’s 2024 GDP growth to 4.8%, while raising the US’ up from 2.6% to 2.8%. The new forecasts come as part of the IMF’s latest World Economic Outlook report, released Tuesday.
Overall, the report paints a picture of a slowing global economy, with growth of just 3.2% predicted for 2024 and 2025 — slightly down from its July prediction.
The IMF had previously predicted China’s economy would grow 5% in 2024, but in its latest briefing, the agency noted that the country’s struggling property market and low consumer confidence had eroded growth.
By contrast, the US economy is now expected to grow more than previously thought, boosted in part by higher wages driving consumer spending and investment.
As a whole, however, the global economy faces significant risks, the IMF found, including rising geopolitical tension, financial market volatility, and the lingering threat of uncontrolled inflation.
SIGNALS
Tariffs could damage both US and global economy
The upcoming US presidential election could prove decisive to both Beijing’s and the global economy’s outlook: Both candidates have campaigned on increasing tariffs on Chinese imports, with Donald Trump proposing levies of 60% or higher. The IMF warned against such protectionism: “It’s a policy that is harming basically everyone,” the agency’s top economist told the Financial Times, adding that a scenario of escalating tit-for-tat retaliatory tariffs could significantly hurt the world economy, including the US. Several US lawmakers on both sides have raised concerns that Trump’s hawkish approach could hurt the country, but if he wins the presidency in November, Republicans may not stop him, Semafor’s Burgess Everett reported.
The global economy remains surprisingly ‘resilient’
Despite the pandemic, global conflicts, and extreme weather events, the world’s economy remains “resilient,” the IMF’s top economist noted in a blog post Tuesday. “It looks like the global battle against inflation has largely been won,” he wrote. But risks still loom over the economic outlook, he warned, and countries should engage in “pivots” on monetary and fiscal policies, including stabilizing debt dynamics. A recent IMF forecast predicted global debt will reach $100 trillion this year for the first time, and will likely continue to rise: “Postponing adjustment will only mean that a larger correction is needed eventually,” the agency noted.
India’s economic growth record complicated by uneven domestic progress
India is among the countries set to see the most growth in 2024, according to the IMF: It is set for a forecasted expansion of 7% in 2024 and 6.5% in 2025 — predictions in line with a trend that has continued since Prime Minister Narendra Modi first took office a decade ago. India’s economy has recovered its momentum since the pandemic, and is benefiting from a shift in global manufacturing away from more advanced economies and toward emerging markets. Still, while “Modinomics” appear to be working, “for a vast swathe of the country’s 1.4 billion people who live on the margins of sustenance, it’s not boomtime just as yet,” the BBC reported.