IMF: Steady Economic Growth Clears Path to Soft Landing

The International Monetary Fund (IMF) published its latest update on the state of the world economy on Tuesday, adding to the chorus of voices predicting a so-called soft landing, i.e. the successful taming of inflation without inducing a recession. "The global economy begins the final descent toward a soft landing," the IMF’s chief economist, Pierre Olivier-Gourinchas, said in a press briefing, as the IMF upgraded its global growth forecast for 2024. According to its World Economic Outlook, the organization now expects global GDP to grow by 3.1 percent this year, up 0.2 percentage points from its October projection of 2.9 percent.

"The global economy has been surprisingly resilient," Gourinchas finds, attributing the latest upgrade to global growth projections to robust growth in the United States and several large emerging and developing markets coupled with faster-than-expected disinflation in many regions. At 3.1 percent this year and 3.2 percent in 2025, global growth prospects remain far below the 2000-2019 average growth of 3.8 percent, however, which is no surprise given the multitude of crises and geopolitical tensions that have been weighing on the global economy for the past few years.

All things considered, the IMF finds that the risks to its latest outlook are no longer limited to the downside, as the possibility of faster-than-expected disinflation or looser fiscal policy balances out downside risks such as persistent inflation requiring prolonged restrictive monetary policy, new commodity prices spikes or further supply chain disruptions.