The July 2024 World Economic Outlook (WEO) update from the International Monetary Fund (IMF) has revised the growth forecast for emerging market and developing economies upward. This projected increase is driven by robust activity in Asia, especially China and India.
“The forecast for growth in India has also been revised upward, to 7.0 percent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” the update noted. “For China, the growth forecast is revised upward to 5 percent in 2024, primarily on account of a rebound in private consumption and strong exports in the first quarter.”
According to the report, China’s GDP growth is expected to decrease to 4.5 percent in 2025 and further decline to 3.3 percent by 2029. This trend is attributed to challenges posed by an aging population and diminishing productivity growth.
“Inflation is expected to remain higher in emerging market and developing economies (and to drop more slowly) than in advanced economies” it said adding inflation is nearing pre-pandemic levels for the median emerging market and developing economy, partly due to declining energy prices.
The update maintained that the global growth is anticipated to align with the April 2024 WEO forecast, at 3.2 percent in 2024 and 3.3 percent in 2025.
“Global activity and world trade firmed up at the turn of the year, with trade spurred by strong exports from Asia, particularly in the technology sector. Relative to the April 2024 WEO, first quarter growth surprised on the upside in many countries, although downside surprises in Japan and the United States were notable,” it said.
In the United States, economic growth projections have been adjusted downward to 2.6 percent for 2024, influenced by a “slower-than-expected” beginning of the year, the update pointed out.
It went on to state, the growth is forecasted to decelerate further to 1.9 percent in 2025 due to a cooling labor market and moderated consumer spending, accompanied by gradual fiscal policy tightening. At the end of 2025, growth is expected to align closely with potential levels, marking the closure of the positive output gap.
