Forecasts for other major countries are mixed.
Growth forecasts for Brazil have been revised significantly upwards, with growth expected to increase by 0.9 percentage point to 3.0% in 2024, thanks to strong consumer spending and investment. By contrast, the outlook for Mexico was lowered to 1.5% as tight monetary policy restrains growth.
China's growth rate forecast for 2024 has been lowered by 0.2 percentage points to 4.8%. While exports are boosting economic activity, China's real estate sector remains weak and consumer confidence is weak. Japan also faced cuts, with its 2024 growth forecast lowered to just 0.3%, reflecting lingering supply disruptions.
The outlook for Germany remains bleak, with growth expected to be zero in 2023 as manufacturing continues to struggle. As a result, the growth forecast for the euro area as a whole in 2024 has been lowered to 0.8%. By contrast, Spain's rate was raised to 2.9%, and the UK's forecast was raised to 1.1%, supported by falling inflation and interest rates to stimulate consumer demand.
India shines brightly despite the global economic slowdown
India stands out as a strong growth bellwether, with the IMF maintaining its forecast of 7.0% in 2024 and 6.5% in 2025. India's growth rate remains the highest among major economies, underscoring its resilience in a lackluster global economic environment.
Geopolitical and trade risks weigh heavily
The IMF warned that the global economy faces significant risks, including potential trade wars and escalating conflicts in regions such as the Middle East and Ukraine. The IMF estimates that if trade tensions worsen due to tariff hikes among major countries, global GDP could decline by 0.8% in 2025 and 1.3% in 2026. Rising commodity prices, particularly oil, pose a further threat to the fragile recovery.
Call for domestic reform and innovation
In response to growing protectionist trends, the IMF urged countries to focus on domestic reforms rather than industrial policies that protect specific industries. The IMF emphasized the need for reforms that strengthen technology, competition, and private investment to foster sustainable economic growth.
