By John Meyer, consultant in financial affairs – Eurasia Business News, October 23, 2024. Article No 1270.

Times Square, Manhattan, New York City- Photo credit : Swann Collins

The International Monetary Fund (IMF) has recently upgraded its growth forecast for the U.S. economy, now predicting a growth rate of 2.8%, from 2.6% in its July estimate while also raising the 2025 projection to 2.2% from 1.9%.

This is the fastest growth among the Group of Seven major advanced economies.

This adjustment highlights the robust performance of the U.S. economy compared to other advanced economies, particularly the euro area, which is expected to grow only 0.8% this year and 1.2% in 2025.

Key Highlights from the IMF Report:

Strong Economic Performance : The U.S. economy’s growth is attributed to strong productivity and employment gains, alongside high consumer demand.

Global Context: The IMF noted that while the U.S. is experiencing significant growth, global economic expansion is projected at 3.2%, with notable performances expected from China (4.6%) and India (6.8%) as well.

Inflation has tumbled : The U.S. economy, the world’s biggest, displayed remarkable resilience in the face of the 11 interest rate hikes the Fed carried out in 2022 and 2023 to fight the worst bout of inflation in four decades. Since peaking at 9.1% in mid-2022, annual inflation as measured by the U.S. consumer price index has tumbled to 2.4% in September.

High inflation has mostly been defeated around the world, the International Monetary Fund said Tuesday, providing a surprisingly upbeat assessment on prices after warning only three months ago that progress on reducing inflation had stalled.

Fiscal Policy Recommendations: IMF Managing Director Kristalina Georgieva emphasized the need for the U.S. government to strengthen its fiscal position by addressing rising debt levels and ensuring sustainable public finances in 2025 and 2026.

Read also : Gold : Build Your Wealth and Freedom

This forecast underscores the U.S.’s role as a key driver of global economic growth while also highlighting the challenges posed by inflation and fiscal sustainability.

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Global growth is expected to remain stable yet underwhelming. However, notable revisions have taken place beneath the surface since April 2024, with upgrades to the IMF forecast for the United States offsetting downgrades to those for other advanced economies, in particular, the largest European countries.

The IMF noticed that in the euro area, growth seems to have reached its lowest point in 2023. A touch weaker than projected in April and July 2024, GDP growth is expected to pick up to a modest 0.8 percent in 2024 as a result of better export performance, in particular of goods. In 2025, growth is projected to rise further to 1.2 percent, helped by stronger domestic demand. Rising real wages are expected to boost consumption, and a gradual loosening of monetary policy is expected to support investment. Persistent weakness in manufacturing weighs on growth for countries such as Germany and Italy.

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© Copyright 2024 – Eurasia Business News. Article no. 1270.