The International Monetary Fund (IMF) released an update to its World Economic Outlook on Tuesday, increasing the U.S. growth forecast for 2024 while leaving the global growth outlook unchanged.
For the United States, the IMF revised its 2024 growth forecast upward to 2.8%, up from the previous estimate of 2.6% in July. The projection for 2025 was also raised to 2.2%, from 1.9%. Meanwhile, global growth remained steady at 3.2% for both this year and the next. China’s growth estimate was slightly reduced to 4.8% for 2024, down from the prior projection of 5%, but it was maintained at 4.5% for 2025.
IMF Chief Economist Pierre-Olivier Gourinchas attributed the positive U.S. growth forecast to strong productivity gains and progress in tackling inflation. He also highlighted the significant role of foreign-born workers in sustaining a robust U.S. labor market, which has been instrumental in boosting the economy despite inflationary pressures. This trend is seen as a critical factor, though it remains a politically sensitive issue, particularly in the lead-up to the 2024 U.S. presidential election, where immigration has become a contentious topic.
The IMF’s global outlook painted a mixed picture. While inflation has largely been brought under control across many countries, concerns remain about rising debt levels and the volatility of geopolitical tensions. In particular, ongoing conflicts in the Middle East continue to pose risks to commodity prices and regional trade.
Gourinchas emphasized that, despite lingering price pressures in some regions, “the global battle against inflation has largely been won.” In fact, inflation in many countries has now returned to levels closer to central bank targets, paving the way for the easing of monetary policies, including interest rate cuts in major economies like the U.S.
Looking ahead, Gourinchas urged nations to address new challenges. One priority is the transition to lower interest rates, already underway in most developed economies. Another critical step is improving fiscal policies, particularly in major economies like the U.S. and China, to stabilize debt dynamics and rebuild financial buffers. He warned that while protectionist trade policies, such as the tariffs proposed by former President Donald Trump, may provide short-term benefits, they often lead to retaliation and long-term economic harm.
On the issue of debt, the IMF cautioned that many countries, especially the U.S. and China, are not doing enough to manage their fiscal policies. The IMF stressed the importance of stabilizing debt and avoiding excessive fiscal tightening, which could harm economic growth.
While the U.S. economy has been performing better than expected in 2024, most economists predict a slowdown in 2025. Concerns over election uncertainty, rising national debt, and weakening consumer confidence are among the key factors contributing to these forecasts. In Asia, trade-sensitive economies like South Korea and Taiwan have shown signs of stagnation, with export orders and trade data falling short of expectations.
Despite global concerns about the direction of U.S. policy, especially regarding anti-globalization sentiments, the IMF emphasized that economic policies should focus on fostering growth, innovation, and global stability. The organization advocates for ambitious domestic reforms that drive technological advancements, improve competition, and enhance resource allocation to support sustainable economic growth worldwide.
