IMF sees global economic growth at 3.2% in 2024

The global economy is forecast to grow at 3.2% in 2024 and 3.3% in 2025, the International Monetary Fund (IMF) stated in its July World Economic Outlook (WEO) Update.

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The US-headquartered financial agency has slightly revised its 2024 global economic growth forecast upward from its previous estimate of 3%.

However, it anticipates upside risks to inflation due to trade tensions and geopolitical conflicts, potentially leading the US Federal Reserve (Fed) to maintain higher interest rates longer this year.

Higher interest rates can make dollar-denominated commodities like oil more expensive for non-dollar holders and ultimately dampen global oil demand growth.  

“Monetary policy rates of major central banks are still expected to decline in the second half of 2024, with divergence in the pace of normalization reflecting varied inflation circumstances,” the IMF said.

Elevated oil prices help the commodity complex

Energy commodity prices are expected to decline by 4.6% this year, but production cuts from OPEC+ and ongoing tensions in the Middle East could lead to higher crude prices and offset the decline in energy commodity prices, according to the IMF.

The IMF previously expected a steeper decline in the prices of various energy-related products including oil, natural gas, coal, and other fuels, in its April WEO.

However, the anticipated easing of labour markets, along with a projected decline in energy prices, should return headline inflation to target levels by late 2025, the agency that represents 190 member countries said.

“The International Monetary Fund on Tuesday maintained its 3.2% global GDP growth forecast for 2024 but raised next year’s estimate by 0.1 percentage point to 3.3%,” VANDA Insights’ founder and analyst Vandana Hari commented.

By Aparupa Mazumder 

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