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Washington
The International Monetary Fund (IMF), on Tuesday (January 30) improved its forecast of growth of global economy citing "resilience" from major economies including India. The updated global growth figure is 0.2 percentage points higher than its previous forecast in October. The IMF said that Indian economy may grow by 6.5 per cent, up by 0.2 per cent.
"We had simultaneously less inflation and more growth," IMF chief economist Pierre-Olivier Gourinchas told reporters ahead of the report's publication as quoted by AFP.
"It's not just a US story. There was a lot of resilience in many, many parts of the world in the last year and going into 2024," he said, highlighting countries including China, Russia, Brazil and India.
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Despite the fresh revision indicating hope for the global economy, the IMF has said that the global growth is likely to remain below 3.8 per cent, the recent historical average. The factors it cited were elevated interest rates, waning government support in the wake of withdrawal of the Covid pandemic and low productivity.
The world body has kept overall inflation outlook unchanged at 5.8 per cent. In advanced economies, the inflation is predicted to be 2.6 per cent this year. There is a decrease of 0.4 per cent from the forecast in October.
In case of developing economies, the average annual inflation is predicted to be 8.1 per cent. This is 0.3 percentage points up from the previous prediction.
US, China behind the boost
The IMF has said that performance by the United States and China has been behind the increased outlook. Both countries' growth prospects in 2024 saw a significant boost. This means that US and China will experience less substantial slowdown than previously predicted.
The IMF has predicted that the US economy will grow by 2.1 per cent this year.
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In absolute terms, the percentage figure is less than 2.5 per cent predicted in 2023 but IMF has attributed this to "statistical carryover effects from the stronger-than-expected growth outcome for 2023."
In case of China, its economy is expected to hit a growth of 4.6 per cent. This is down from 5.2 per cent last year but the latest figure is better than what was previously anticipated.
Gloom in Europe
Things might look brighter in the US, China and other Asian countries, the picture in Europe doesn't look very encouraging.
The IMF has highlighted "notably subdued growth in the euro area."
Among the G7 nations, Germany is on path to become the slowest-growing economy with growth of just 0.5 per cent this year. This will follow a 0.3 per cent contraction in 2023.
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The UK, Italy and France will see 1 per cent or less growth this year, says IMF. Spain is slightly ahead with growth forecast of 1.5 per cent.
(With inputs from agencies)