IMF’s economic view: Brighter outlook for China and India but tepid global growth

Washington, July 16

The International Monetary Fund is upgrading its economic outlook this year for China, India and Europe while modestly lowering expectations for the United States and Japan. But it says worldwide progress against accelerating prices has been slowed by stickier-than-expected inflation for services, from airline travel to restaurant meals.

Overall, the IMF said on Tuesday that it still expects the world economy to grow a lackluster 3.2 per cent this year, unchanged from its previous forecast in April and down a tick from 3.3 per cent growth in 2023. From 2000 through 2019, before the pandemic upended economic activity, global growth had averaged 3.8 per cent a year.

The IMF, a 190-nation lending organisation, works to promote economic growth and financial stability and reduce global poverty. In a blog post that accompanied the latest update to its World Economic Outlook, the IMF’s chief economist, Pierre-Olivier Gourinchas, wrote that China and India would account for nearly half of global growth this year.

Partly because of a surge in Chinese exports at the start of 2024, the IMF upgraded its growth forecast for China this year to 5 per cent from the 4.6 per cent it had projected in April, though down from 5.2 per cent in 2023. The IMF forecast was posted before Beijing reported on Monday that the Chinese economy, the world’s second-largest after the United States, had grown at a slower-than-expected 4.7 per cent annual rate from April through June, down from 5.3 per cent in the first three months of the year.

China’s economy, which once regularly grew at a double-digit annual pace, is facing significant challenges, notably the collapse of its housing market and an aging population that is leaving the country with labour shortages. By 2029, Gourinchas wrote, China’s growth will slow to 3.3 per cent.

India’s economy is now forecast to expand 7 per cent, up from the 6.8 per cent the IMF had projected in April, in part because of stronger consumer spending in rural areas.