A.SREENIVASA REDDY (ABU DHABI)

The International Monitory Fund in its latest World Economic Outlook (WEO) report upgraded growth projections for China and India from its April figures whereas the total world growth figures remained the same from its previous estimates.

The summary of the report was released by the IMF’s Chief Economist Pierre-Olivier Gourinchas at a press conference in Washington.

The world growth remained unchanged from April projections at 3.2% for 2024.

In 2025, the world is projected to grow at 3.3%, which is just 0.1% more than the April forecast.

Jose Luis de Haro from the Communications Department of the IMF clarified at the start of the press conference that the July update contained detailed growth figures only for select countries, not for all.

Elaborating on the specifics, he said the WEO reports are issued four times a year in January, April, July, and October.

But only April and October reports contain detailed figures for each country, he added.

Hence, in this July report, the detailed figures for the UAE are not available.

India’s growth outlook for 2024 was upgraded to 7.1% from 6.8% and China’s to 5% from 4.6%.

For 2025, India and China are projected to grow at 6.5% and 4.5% respectively. Both these countries together constitute half of global growth, the IMF chief economist said.

“The emerging economies of Asia remained the main engine of the global growth,” the chief economist observed.

Coming to broader the Middle East and Central Asia, the IMF outlook was less optimistic, with growth projections revised downward to 2.4% and 4.0% for 2024 and 2025, respectively.

Saudi Arabia, the only Middle Eastern country with detailed figures in this report, is expected to grow at a slow 1.7% in 2024, but with a projected jump to 4.7% in 2025. As for the developed world, the US is expected to grow at 2.6% in 2024 and 1.9% in 2025, not different from April projections.

The Euro area received a slightly revised upward projection, with growth estimated at 0.9% for 2024 (up from 0.8%) and 1.5% for 2025.

The IMF attributes this to “shoots of recovery materialising in Europe” despite high energy prices.

Japan’s growth projection was revised downward to 0.7% for 2024, compared to 0.9% in the April forecast.

This dip is attributed to disruptions caused by a major automobile plant shutdown in the first quarter.

After surging to 8.7% in 2022 as the global economy rapidly recovered from the pandemic recession, worldwide inflation is expected to continue easing - from 6.7% in 2023 to 5.9% this year and 4.4% in 2025.

But progress is slowing, the IMF said, because services inflation has proved persistently difficult to tame.

The fund warned that some central banks may keep interest rates higher for longer than anticipated, until they’re convinced that inflation is firmly under control.

Higher-than-expected borrowing costs could weaken global growth as a result.

“The good news is that as headline shocks receded, inflation came down without a recession,’’ Gourinchas wrote in a blog post that accompanied the report.

The bad news, he said, is that it still isn’t back to pre-pandemic levels.

In response to a question, Gourinchas expressed concern over increasing trade restrictions by nation states that can affect the free flow of goods and technologies.

But as of now, the global trade remained robust, he said. Noting that there is policy uncertainty across the world, especially due to elections in several countries, the IMF chief economist said the debt-to-GDP ratio is an area of concern and reining in debt levels could give more leg room for the countries to navigate through difficult situations.

The summary of the report was released by the IMF’s Chief Economist Pierre-Olivier Gourinchas at a press conference