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There’s some good economic news in the International Monetary Fund’s latest World Economic Outlook, at least.
Growth in global output is expected to align with the IMF’s previously predicted 3.2%, representing no change from this April.
But that’s kind of the end of the good news; the IMF also acknowledged that the global economy is “in a sticky spot.”
Despite the apparent stability of global growth, the report’s authors note that “under the hood, however, offsetting growth revisions have shifted the composition,” adding that “among advanced economies, growth is expected to converge over the coming quarters.”
The United States economy is growing a bit slower than expected. The IMF lowered its projected economic growth for the US to 2.6% in 2024, a 0.1 percentage point dip from April’s projection. “The United States shows increasing signs of cooling, especially in the labor market, after a strong 2023,” Pierre-Olivier Gourinchas, the IMF’s chief economist, said in a statement that accompanied the report.
By 2025, US growth is expected to slow to 1.9% “as the labor market cools and consumption moderates, with fiscal policy starting to tighten gradually,” the report’s authors noted.
And while global inflation is expected to slow to 5.9% this year, down from 6.7% in 2023, Gourinchas noted that “further challenges to disinflation in advanced economies could force central banks, including the Federal Reserve, to keep borrowing costs higher for even longer,” which “would put overall growth at risk.”
“Unless goods inflation declines further, rising services prices and wages may keep overall inflation higher than desired,” Gourinchas said. “Even absent further shocks, this is a significant risk to the soft-landing scenario.”
So, yeah, we really loaded the good news up top.