IMF cuts its 2024 growth forecast

The world economy has lost momentum due to rising interest rates, the Ukrainian invasion and widening geopolitical rifts, and now faces new uncertainties. War between Israel and Hamas militantsThe International Monetary Fund issued a warning on Tuesday.

The International Monetary Fund said that global economic growth is expected to slow to 2.9% in 2024 from 3% this year. Next year’s forecast is down a notch from the 3% forecast in July.

The economic slowdown comes at a time when the world has not fully recovered from the devastating but short-lived COVID-19 recession that struck in 2020 and may now see the impact of conflict in the Middle East, particularly in the region. oil price.

A series of previous shocks, including the pandemic and Russia’s war in UkraineCompared with pre-COVID-19 trends, global economic output has fallen by approximately $3.7 trillion over the past three years.

“The global economy is chugging along, not sprinting,” IMF chief economist Pierre-Olivier Gurinchas said at a press conference on the sidelines of the organization’s annual meeting in Marrakech, Morocco. “

The International Monetary Fund’s forecast for economic growth of 3% this year is down from 3.5% in 2022, but unchanged from its July forecast.

It’s ‘too early’ to assess the impact of the past few days on global economic growth War between Israel and Palestinian militant group Hamas In Gaza, Gurinchas said. He said the International Monetary Fund was “closely monitoring the situation” and noted that oil prices have risen about 4% in the past few days.

“We have seen this in previous crises and conflicts. Of course, this reflects the potential risk that oil production or transportation in the region may be disrupted,” he said.

Gurinchas said that if oil prices continue to rise by 10%, global economic growth will decrease by 0.15% and global inflation will increase by 0.4%.

“But again, I stress it’s too early to draw conclusions,” he added.

Gurinchas said the world economy has shown “amazing resilience” so far, even as the Fed and other central banks around the world take action. Significantly increase interest rates Fighting the recovery of inflation.

Raising interest rates could help ease price pressures Not many people will be unemployed. He said the combination was “increasingly consistent” with a so-called soft landing, the idea that inflation could be curbed without causing a recession.

The International Monetary Fund expects global consumer price inflation to fall from 8.7% in 2022 to 6.9% this year and to 5.8% in 2024.

The United States is the top performer in the International Monetary Fund’s latest World Economic Outlook, which was completed before the war between Israel and Hamas broke out. The International Monetary Fund raised its forecast for U.S. economic growth to 2.1% this year (similar to 2022) and 1.5% in 2024 (a sharp increase from the 1% forecast in July).

As an energy exporter, the United States will not be hurt as badly as Europe and other countries. rising oil prizethe numbers soared last year after Russia invaded Ukraine, and have risen sharply more recently due to: Saudi Arabia cuts production. American consumers are more willing than most to spend the savings they accrued during the pandemic.

The picture for the 20 countries that share the euro is bleaker, and Exposed to rising energy prices. The International Monetary Fund has lowered the euro zone’s economic growth rate this year and 2024 to 0.7% and 1.2% respectively. German economy will shrink It will grow by 0.5% this year and return to 0.9% next year.

As the world’s second-largest economy, China’s economy is expected to grow 5% this year and 4.2% in 2024 – both lower than the International Monetary Fund’s July forecast.

China’s economy is expected to rebound this year after the Communist government ended tough “zero-COVID” lockdowns that sapped economic growth in 2022. Overbuilt housing market.

IMF again expresses concern about world countries fragmenting into geopolitical blocs restrict international trade and global economic growth.

The United States and its allies have imposed unprecedented sanctions on Russia over its invasion of Ukraine and are seeking to reduce their reliance on Chinese imports as tensions with Beijing rise.

The International Monetary Fund noted that countries implemented nearly 3,000 new trade restrictions last year, compared with fewer than 1,000 in 2019. International trade is expected to grow by only 0.9% this year and 3.5% in 2024, significantly lower than the 2000-2019 average of 4.9%. %.

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