IMF upgrades global growth forecast as economy proves 'surprisingly resilient' despite downside risks

The International Monetary Fund on Tuesday slightly raised its global growth forecast, saying the economy had proven "surprisingly resilient" despite inflationary pressures and monetary policy shifts.

The IMF now expects global growth of 3.2% in 2024, up by a modest 0.1 percentage point from its earlier January forecast, and in line with the growth projection for 2023. Growth is then expected to expand at the same pace of 3.2% in 2025.

The IMF's chief economist, Pierre-Olivier Gourinchas, said the findings suggest that the global economy is heading for a "soft landing," following a string of economic crises, and that the risks to the outlook were now broadly balanced.

"Despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose," he said in a blog post.

Growth is set to be led by advanced economies, with the U.S. already exceeding its pre-Covid-19 pandemic trend and with the euro zone showing strong signs of recovery. But dimmer prospects in China and other large emerging market economies could weigh on global trade partners, the report said.

China, whose economy remains weakened by a downturn in its property market, was cited among a series of potential downside risks facing the global economy. Also included were price spikes prompted by geopolitical concerns, trade tensions, a divergence in disinflation paths among major economies and prolonged high interest rates.

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

Central banks are now being closely watched for a signal on the future path of inflation, with opinion diverging on either side of the