IMF Lowers 2024 Global Economic Growth Projection: What's the Reason?

In its October 2023 edition of the *World Economic Outlook* (WEO), the International Monetary Fund (IMF) projects that global economic growth will slow from 3.5% in 2022 to 3% in 2023, and further decline to 2.9% in 2024.

The forecast for 2024 is lower than previous projections. In the July 2023 WEO, the IMF had estimated next year's global growth to reach 3%.

"The latest projection for 2024 is down 0.1 percentage points compared to our July projection. This growth figure is also well below the historical average," the IMF stated in its report.

The IMF outlined several factors that risk suppressing global economic growth. The primary risk is the real estate crisis in China.

"The real estate crisis in China could worsen and become a significant risk to the global economy," the IMF said.

"If real estate prices fall too quickly, bank balance sheets will deteriorate and cause financial repercussions. However, if real estate prices are artificially supported, it will impact hampered investment opportunities in other sectors, reduced new construction activity, and decreased sales," it continued.

In addition, commodity price volatility has the potential to burden global economic growth.

"Commodity prices could become more volatile if political tensions and climate change-related disruptions occur," said the IMF.

"Oil prices have risen by about 25% due to supply cuts from OPEC+. Food prices remain high with the escalating war in Ukraine. Geoeconomic fragmentation is also causing higher commodity distribution prices across regions," it continued.

The IMF assesses that commodity price volatility could increase inflation and further burden heavily indebted nations.

Amidst this situation, the IMF encourages countries to strengthen cooperation.

"All countries must strive to limit geoeconomic fragmentation that hinders shared progress," said the IMF.

"Countries need to work towards restoring confidence in the rules-based multilateral framework that prioritizes transparency, policy certainty, and promotes shared global prosperity," it added.