IMF report predicts steady economic growth; Chinese investment hailed

A report by the International Monetary Fund (IMF) has predicted global economic growth of 3.1 percent in 2024, rising to 3.2 percent in 2025, with China playing a key role in growing economic resilience.

The annual forecast stated that unexpected flexibility in several of the world's biggest economies, including China and the U.S., contributed to a 0.1 percent projection increase and hailed the reassuring employment outlook.

Petya Koeva Brooks, Director Deputy General at the IMF, told CGTN Europe: "We have seen a lot of resilience in the global economy and that's the reason why we've upgraded growth to 3.1 percent this year. This is due to better than expected outcomes we've observed in the U.S., China, and other large emerging markets."

She added: "If we break it down further and try to understand the factors behind that, we see that on the demand side, the private consumption and government spending have been more supportive than what we had previously expected. On the supply side, labor force participation has been better than expected, too."

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China's role in the increasingly positive economic outlook was noted in the report. While the country's property sector has suffered several shocks in recent months, government investment to protect the country against other potential issues saw the IMF upgrade its forecast.

"There's been a fiscal package that the Chinese government is implementing," says Brooks. "And a lot of that has to do with strengthening the resilience of the economy to to deal with weather related and climate events. 

The last 12 months have witnessed the emergence of a host of geopolitical issues, including Israel's conflict with Hamas in Gaza, the ongoing conflict between Ukraine and Russia, as well as climate-related events such as Europe's summer of simmering heatwaves.

Those events have prompted the IMF to upgrade its risks to global growth. "A year ago we were talking about risks being firmly on the downside and now they are more balanced," says Brooks. "We could still see an upside, with stronger fiscal support which could boost growth. 

"We could see faster growth in China. We could also see some of the positive impacts on productivity of some of the innovation and AI developments that we've seen. But then, of course, there are very prominent downside risks, including the geopolitical developments in the Middle East and disruptions in the Red Sea."

"That is having an impact on shipping costs, though the impact of those on the global economy so far have been limited. But again, if things were to escalate, then we could be in a situation where we see higher commodity prices with an adverse impact on inflation, higher supply disruptions. We're not there, but it's a risk."

For policymakers, the road ahead is a challenging one, and Brooks has urged caution. "There needs to be renewed focus on fiscal accounts," she says. "Debt levels have gone up and spending has eroded the financial buffers that many countries had. 

"This year will be a huge one in terms of the number of elections worldwide, but it's even more important for the future and for economies to be able to respond to future shocks, by restoring some of these fiscal buffers."

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