In an update to its flagship World Economic Outlook report, the International Monetary Fund said it expects global growth to reach 3.3 percent this year, up 0.1 percentage point from its previous forecast in October, and to remain at 3.3 percent through 2026.
"Growth is robust," IMF chief economist Pierre-Olivier Gourinchas told AFP in an interview, adding that it remains below the average global growth rate in the first two decades of the 21st century, which is 3.7%.
The IMF expects global inflation to slow further to 4.2% this year and 3.5% in 2026, with prices cooling faster in advanced economies than in emerging markets.
Growing divergence
"Among the advanced economies, the interesting development here is the strength, resilience and growth of the U.S. economy," Gurinchas said, pointing to the IMF's decision to raise its U.S. growth forecast to 2.7 percent in 2025 and to 2.1 percent in 2026.
"The labor market is strong, there is strong demand, private demand is robust, there is good confidence," he said.
One of the risks to the IMF's forecasts is political uncertainty in the United States, where Donald Trump is preparing to return to the White House.
The IMF did not include the Republican president-elect's policy proposals in its forecasts, instead basing its projections on existing US policies.
"The implication is that when we look at the risk to the U.S., we see upside risk to inflation," he said.
The economic picture in the U.S. contrasts with that in the eurozone, where Germany's sharp downgrade has weakened expectations for a growth recovery.
The IMF now forecasts that eurozone growth will rise slightly to 1.0% this year and 1.4% in 2026, below its October forecast.
"Some of the differences are structural," Gurinchas told reporters on Friday, noting "persistently stronger" productivity growth in the U.S. than in Europe, especially in the technology sector.
He added that this was "related to a favorable business environment and deeper capital markets."
The fund left its forecast for Japan's growth this year and next unchanged and slightly raised its forecast for the UK in 2025.
In Russia, which has been hit by the ongoing and costly war in Ukraine, the IMF expects growth to slow sharply from 3.8% in 2024 to 1.4% this year and to 1.2% in 2026.
The IMF expects China's growth rate to slow further this year to 4.6 percent, 0.1 percentage point higher than the October forecast, before slowing to 4.5 percent next year.
The slight rise is due to the Chinese government's recently announced package of fiscal measures to help a slowing economy that is struggling with a slumping property market and uncertainty over trade policy after Donald Trump takes office next week.
Slowing growth in the world's second-largest economy is leading to something of a "rebalancing" among emerging markets, Gurinchas said, with countries such as India - which the IMF expects to grow 6.5 percent this year and next - playing a more prominent role.
Growth in the Middle East and Central Asia is expected to accelerate at a lower pace than previously forecast, mainly due to the effect of oil production cuts by the OPEC+ group of oil-producing countries, which includes Saudi Arabia.
Economic activity in Latin America is expected to pick up faster, the IMF said, adding that it also expects growth in sub-Saharan Africa to accelerate this year. | BGNES
