WASHINGTON, April 16. /TASS/. The International Monetary Fund (IMF) has improved its forecast for the growth of global economy for 2024 to 3.2%, estimates for next year have not changed, according to the fund’s latest report on the prospects for the development of the world economy, presented in Washington.
The IMF improved its forecasts for the current year published in January by 0.1 percentage points. At the same time, the growth rate of the global economy last year remained 3.2%.
"The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic" as well as Russia’s special military operation in Ukraine. In addition to that among the reasons the IMF names "weak growth in productivity and increasing geo-economic fragmentation," the report says.
According to the experts’ estimates, as the global inflation "descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession."
"Growth in employment and incomes held steady, reflecting supportive demand developments - including greater-than-expected government spending and household consumption - and a supply-side expansion amid, notably, an unanticipated boost to labor force participation. The unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households in major advanced economies to draw on substantial savings accumulated during the pandemic," the report says.
As the authors of the report note, the latest forecast for global growth five years from now - at 3.1% - is at its lowest in decades."
The pace of convergence toward higher living standards for middle-and lower-income countries has slowed, implying a persistence in global economic disparities," the report says.
Negative factors
As the INF experts explained, "the relatively weak medium-term outlook reflects lower growth in GDP per person stemming, notably, from persistent structural frictions preventing capital and labor from moving to productive firms."
"Risks to the global outlook are now broadly balanced," the fund’s experts note. Among the negative factors they mention "new price spikes stemming from geopolitical tensions," including those from the conflicts in Ukraine and the aggravation of the Israeli-Palestinian conflict.
Besides that, "amid high government debt in many economies, a disruptive turn to tax hikes and spending cuts could weaken activity, erode confidence, and sap support for reform and spending to reduce risks from climate change." The authors of the report stress that "geo-economic fragmentation could intensify, with higher barriers to the flow of goods, capital, and people implying a supply-side slowdown."