The U.S. economy is set to continue driving global growth through the remainder of 2024 and into 2025, propelled by strong consumer spending that has withstood high inflation and the elevated interest rates aimed at curbing it, according to the International Monetary Fund (IMF). In its latest World Economic Outlook, the IMF revised its U.S. growth forecasts upward for both years, making it the only developed economy to receive such a revision. The IMF notes that the U.S. has largely achieved the Federal Reserve’s goal of a “soft landing”—containing inflation without causing major damage to the job market.
Emerging economies like India and Brazil are also highlighted as positive growth drivers, while China’s outlook has been downgraded due to ongoing challenges in its property sector and weak consumer confidence. The IMF also warned of several risks, including ongoing conflicts, potential new trade wars, and the lingering effects of tight monetary policies implemented by central banks to rein in inflation. However, the U.S. economy remains resilient, with wage growth and rising asset prices continuing to support consumer spending. The IMF now projects U.S. growth to hit 2.8% in 2024 and 2.2% in 2025.
Brazil saw a substantial upgrade, with its 2024 growth forecast raised to 3%, while Mexico’s was downgraded to 1.5% due to the impact of tighter monetary policy. China’s growth forecast for 2024 was cut to 4.8%, while Germany is expected to see zero growth this year, which has weighed down the overall outlook for the euro zone.
India remains the world’s fastest-growing major economy. The IMF projects a 7% growth rate for FY24-25, supported by a recovery in rural consumption following favorable harvests. Inflation is expected to decline to 4.4%, despite some short-term volatility in food prices. Post-election reforms in India are likely to focus on three key areas: implementing labor codes to improve job creation and worker protection, removing trade restrictions to boost competitiveness, and continuing infrastructure development, including both physical and digital infrastructure. In addition, reforms in agriculture, land management, education, and skills development are seen as vital for sustaining long-term growth.
Overall, while global growth is projected to remain at a modest 3.2% in 2024 and dip slightly to 3.1% by 2025, the U.S. and emerging markets such as India and Brazil offer bright spots amid a challenging global environment.
