WASHINGTON, D.C.: The International Monetary Fund (IMF) announced on Tuesday it has raised its 2024 global growth forecast to 3.1 percent, citing unexpected resilience in major advanced and emerging market economies around the world, including the United States and China.

The updated figure, released in the latest World Economic Outlook (WEO) report, is 0.2 percentage point higher than the IMF's previous forecast in October.

RESILIENCE Pierre-Olivier Gourinchas, International Monetary Fund (IMF) chief economist, speaks in a conference at IMF headquarters in Washington, D.C., on July 25, 2023. The IMF announced on Tuesday, Jan. 30, 2024, it observed unexpected resilience in major advanced and emerging market economies around the globe and consequently raised its 2024 global growth forecast to 3.1 percent. AFP PHOTO

"The global economy continues to display remarkable resilience, with inflation declining steadily and growth holding up," IMF chief economist Pierre-Olivier Gourinchas told reporters in South Africa on Tuesday.

"The chance of a soft landing has increased, but the pace of expansion remains slow and risks remain," he added, alluding to policymakers' attempts to successfully cut inflation by raising interest rates while avoiding a recession.

Despite the upgrade, the IMF predicts that global growth will remain below its recent historical average of 3.8 percent this year and next due to continued impacts of elevated interest rates, the withdrawal of pandemic-related government support and persistently low levels of productivity.

Among the Group of Seven (G7) advanced economies, growth in European countries looks set to remain weak, reflecting ongoing challenges, while Japan and Canada are expected to fare slightly better.

The IMF's overall inflation outlook remained unchanged at 5.8 percent for 2024, but that masks a significant underlying shift between richer and poorer countries.

Inflation in advanced economies is now forecast to be 2.6 percent in 2024, down 0.4 percentage point from October, while emerging and developing economies are expected to hit an annual inflation rate of 8.1 percent, up 0.3 percentage point.

Much of the increase can be attributed to trouble in Argentina, where consumer price increases exceeded 200 percent last year amid an economic crisis.

"Excluding Argentina, global headline inflation will decline to 4.9 percent this year," Gourinchas said.

US, China lift growth

The United States and China, the world's two largest economies, both saw significant upgrades to their growth outlook for 2024, putting them on track for a less substantial slowdown than the IMF previously anticipated.

The IMF now expects the US economy to grow by 2.1 percent in 2024 down slightly from an estimated 2.5 percent in 2023.

This is largely due to the "statistical carryover effects from the stronger-than-expected growth outcome for 2023," the IMF said.

China's economy is on track to hit 4.6-percent growth this year, up 0.4 percentage point, though it is still expected to slow down from last year's figure of 5.2 percent.

China's growth upgrade "reflects carryover from stronger-than-expected growth in 2023 and increased government spending on capacity building against natural disasters," according to the IMF.

India continues to be an ongoing bright spot in the global economy; the IMF now expects it to grow by 6.5 percent this year following an estimated growth rate of 6.7 percent in 2023.

The Fund also increased the growth prospects for Russia, Iran and Brazil for the year ahead.

Challenges remain in Europe

While many Asian economies remain buoyant, Europe continues to cast a long shadow over the global outlook, with the IMF highlighting "notably subdued growth in the euro area."

Germany is once again set to be the slowest-growing G7 economy, expanding by just 0.5 percent this year after contracting by an estimated 0.3 percent in 2023.

The United Kingdom, France and Italy are all also expected to see growth of 1.0 percent or less this year, while Spain's economy is forecast to fare slightly better, growing by 1.5 percent.

The tepid euro area growth reflects "weak consumer sentiment, the lingering effects of high energy prices and weakness in interest-rate-sensitive manufacturing and business investment," the IMF noted in the WEO report.

Despite some challenging forecasts, the overall picture in 2024 looks set to be less gloomy for many countries than it was in 2024: Every country cited in the report save Argentina is set to have positive growth this year.

This is an improvement from 2023, when four out of the 30 economies cited in the report are estimated to have contracted.