IMF expressed concern about the increase in global uncertainty, owing to the multiplication of both geopolitical and economic risks.
The world economy will grow 3.2 percent this year and next year, predicted Tuesday the International Monetary Fund (IMF), which opts for prudence in its forecasts due to the slowdown in emerging countries such as China, Mexico or Russia.
On the occasion of the publication of its annual report on the world economy (WEO), the IMF expressed concern about the increase in global uncertainty, due to the multiplication of both geopolitical and economic risks, in particular the economic loose in China.
“The risks intensify,” for example geopolitical tensions, which can drive up energy prices, warned IMF chief economist Pierre-Olivier Gourinchas in an interview with AFP.
As a result, growth forecasts remain weak globally.
Some countries enjoy better economic health than others.
The United States should end the year with growth of 2.8 percent, estimates the IMF, which forecasts 2.2 percent expansion of the world’s largest economy by 2025.
“We are close” to a soft landing of the U.S. economy, Gourinchas said. “Consumption is going very well and at the same time inflation continues to slow down.”
“Soft landing” means controlling inflation without recession.
Emerging economies
Among emerging countries China continues to show signs of weakness.
IMF estimates do not take into account Beijing’s recent plans to revive its economy announced in recent days, but in the current state, the international economic organization forecasts the country 4.8 percent of GDP growth this year and 4.5 percent next year.
“The Chinese economy must find how to develop its engines of internal growth, find ways to stimulate sustainable growth with its domestic demand, especially by developing social protection to free up a part of the savings,” Gourinchas stressed.
Latin America and the Caribbean follows the general trend: economic growth drops from 2.2 per cent in 2023 to 2.1 per cent in 2024, before rebounding to 2.5 per cent in 2025.
With respect to the latest IMF forecasts in July, data improves 0.3 percentage points for this year, while they fall 0.2 points by 2025.
For 2024 in Brazil a growth of 3 % is expected, Mexico 1.5 %, Colombia 1.6 %, Chile 2.5 %, Peru 3 %, Ecuador 0.3%, Venezuela 3 %, Bolivia 1.6 %, Paraguay 3.8 % and Uruguay 3.2 %.
Argentina, Latin America’s third-largest economy, will continue last year’s recessionary trend.
Clouds persist amid the reformist vortex of ultraliberal President Javier Milei, with a 3.5% contraction this year. However, growth is expected to rebound significantly by 2025 to 5%, according to the IMF, an agency with which the country must pay a $44 billion loan.
“Inflation”
Not everything is negative: inflation drops to its 2 percent target in major economies, a success due, according to the IMF, to central banks.
“We’re always slightly above, but we’re getting closer and the gap should close in 2025,” Gourinchas said.
“At the same time, growth has resisted and will continue to resist, so a soft landing is in sight and is a major achievement,” he added.
In most Latin American countries inflation has declined but some have seen upward revisions since April due to a combination of factors.
The IMF cites “a solid wage growth that prevents faster disinflation in the services sector” in Brazil and Mexico, weather events in Colombia and “ups of regulated electricity tariffs” in Chile.
In Europe the new engine of the euro area is Spain: 2.9 % this year and EUR.1 % in 2025.
Germany will instead experience zero growth this year and will grow 0.8% in 2025, according to IMF forecasts.
France remains stable at 1.1 % in 2024 and 2025.
Russia, subject to sanctions but with an economy sustained by military spending, will end the year with 3.6 per cent growth.
This article has been translated after first appearing in Diario El Mundo