On Tuesday, the International Monetary Fund (IMF) adjusted its global economic growth forecast upward, indicating an improved outlook for both the United States and China. The adjustment was attributed to a faster-than-expected alleviation of inflation pressures.

Pierre-Olivier Gourinchas, Chief Economist of the IMF, presented the updated World Economic Outlook, expressing optimism about a “soft landing” on the economic front. However, he emphasized that while the global economy demonstrated remarkable resilience, overall growth and global trade remained below historical averages.

Gourinchas conveyed to reporters in Johannesburg that the likelihood of a global recession had diminished but cautioned about lingering risks. These risks included geopolitical tensions in the Middle East and potential disruptions to commodity prices and supply chains due to incidents in the Red Sea.

The IMF attributed the improved outlook to robust private and public spending despite tight monetary conditions, increased labor force participation, repaired supply chains, and lower energy and commodity prices.

The revised global growth forecast for 2024 stood at 3.1 percent, a two-tenths of a percentage point increase from the October projection. The IMF anticipated unchanged growth of 3.2 percent in 2025, still below the historical average of 3.8 percent from 2000 to 2019.

Projections for global trade indicated an expansion of 3.3 percent in 2024 and 3.6 percent in 2025, notably below the historical average of 4.9 percent, with the imposition of numerous new trade restrictions contributing to these restrained gains.

The IMF adhered to its October forecast for headline inflation at 5.8 percent for 2024 but adjusted the 2025 forecast downward to 4.4 percent from the previous 4.6 percent. Gourinchas noted that excluding Argentina, experiencing a spike in inflation, global headline inflation would be lower.

In terms of inflation, advanced economies were expected to see an average of 2.6 percent, down by four-tenths of a percentage point from the October forecast, with inflation projected to reach central bank targets of 2 percent by 2025. In contrast, emerging market and developing economies were forecasted to experience average inflation of 8.1 percent in 2024, easing to 6 percent in 2025.