The International Monetary Fund (IMF) has revised its global growth forecast for 2024 to 3.1%, highlighting the “resilience” observed in major advanced and emerging economies worldwide. In its recent annual report on the global economy, the IMF disclosed an upward adjustment in growth expectations for the current year, compared to the 2.9% projection published in October. Notable reassessments were made for the United States, China, India, Russia, and Mexico.
In response to the success of the policy of raising interest rates, the IMF announced a reduction in its inflation expectations for 2024 in the wealthiest countries. However, it raised expectations for other economies, reports Al-Qabas daily.
The World Economic Outlook report reveals a revised growth projection for the Saudi economy in 2024, now standing at 2.7%, a significant drop from the 4% estimate in October. This substantial decrease of 1.3 percentage points is attributed largely to a “decline in oil production and exports.”
Another economy affected by downward revisions is Egypt, with the IMF anticipating a growth rate of 3% for the fiscal year 2023-2024, a 0.6 percentage point decrease from the October report. Egypt is currently in discussions with the IMF to double its $3 billion bailout program to at least $6 billion. The delays in the program’s reviews were linked to conditions related to the liberalization of the pound’s exchange rate and expediting the privatization of state-owned enterprises.
These adjustments in growth expectations for the region’s first and third-largest economies were reflected in the IMF’s estimates for the Middle East and Central Asia region in 2024. The report reduced growth projections by 0.5 percentage points to 2.9%, mainly attributing these changes to Saudi Arabia.
The reduction is associated with a temporary decrease in oil production in 2024, including individual cuts and those mandated by the OPEC+ agreement. However, non-oil growth is anticipated to remain robust.
At the global level, the IMF’s positive outlook for 2024 is driven by an increase in growth expectations for the two largest economies, the United States and China.
The report suggests that the decline in inflation and stable growth in various markets pave the way for a “soft decline” in the global economy, potentially leading to further easing of financial conditions by central banks in most regions.
Despite these positive projections, the IMF warns of potential negative developments. A prolonged period of tightening monetary conditions could occur if commodity prices rise sharply due to geopolitical shocks, such as ongoing attacks in the Red Sea, supply disruptions, or sustained core inflation.
The most important variables for growth expectations in 2024 are:
- The increase in growth expectations for advanced economies is due to the rise in growth in America, which is partially balanced by the decline in growth in the Eurozone.
- Raising US economic growth expectations for the current year to 2.1% from 1.5% estimated in October, with it slowing to 1.7% next year.
- Reducing growth expectations for the Eurozone economy in 2024 to 0.9% from 1.2% estimated in October, with it accelerating in 2025 to 1.7%.
- Raising China’s economic growth estimates this year to 4.6% from 4.2%.