Daily Management Review

IMF forecasts global economic slowdown


Experts from the IMF report a nearly global fall in business activity. In wealthy nations, this decline is correlated with a decline in industry and the exhaustion of rebound growth in the services sector; in developing countries, it is correlated with lower external demand.

Michael Gaida
Michael Gaida
The IMF released the global macro forecast's June update. This year, global economic growth is forecasted to decline from 3.5% to 3% (the projection for this year even raised by 0.2 percentage points from the April report, but the forecast for 2024 remained the same at 3%).

The pace will slow in developed countries from 2.7% to 1.5% on the back of a fall in industry and the gradual exhaustion of the benefit of development in the services sector.

GDP growth in the US is anticipated to decrease from 2.1% to 1.8% this year (down to 1% next year), while in the euro area it is anticipated to slow from 3.5% to 0.9% (projection for 2024 + 1.5%). Germany's GDP is expected to decline by 0.3% this year while other nations are predicted to continue experiencing positive growth rates.

According to the IMF, "geo-economic fragmentation" and declining external demand are harming developing countries. Growth rates will mostly stay at last year's level (4%), but in China, they are expected to pick up steam from 3% to 5.2%. 

World trade growth will fall from 5.2% to 2% before increasing to 3.7% in 2024, according to the IMF. This slowdown reflects the global demand slowing down as well as the growing importance of the services sector and the lingering impacts of stronger dollar (which slows down trade).

source: imf.org