## The Global Economy in a Sticky Spot

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### Overview
- Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025.
- Varied momentum at the turn of the year has somewhat narrowed output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential.
- Services price inflation is holding up progress on disinflation, complicating monetary policy normalization and raising the prospect of higher-for-even-longer interest rates.
- Global financial conditions remain accommodative despite a general upward drift in longer-term yields; buoyant corporate valuations have kept overall conditions broadly at the level of the April WEO.

### Growth projections and near-term developments
- Global growth: 3.2 percent in 2024 and 3.3 percent in 2025 (broadly unchanged from April).
- United States:
  - Projected growth: 2.6 percent in 2024 (0.1 percentage point lower than April); 1.9 percent in 2025 as labor market cools and consumption moderates.
- Euro area:
  - Projected growth: 0.9 percent in 2024 (an upward revision of 0.1 percentage point); 1.5 percent in 2025.
- Japan:
  - 2024 growth revised downward by 0.2 percentage point, reflecting temporary supply disruptions and weak private investment in Q1.
- Emerging Market and Developing Economies:
  - Forecast revised upward, powered by stronger activity in Asia.
  - China: 5.0 percent (2024); 4.5 percent (2025); medium-term deceleration to 3.3 percent by 2029.
  - India: 7.0 percent (2024) (calendar-year projections noted elsewhere in the source).
- Regional revisions:
  - Brazil: 2024 growth revised downward (near-term impact of flooding); 2025 revised up to reflect reconstruction and hydrocarbon production acceleration.
  - Mexico: 2024 growth revised downward due to moderation in demand.
  - Saudi Arabia: 2024 growth revised downward by 0.9 percentage point, mainly reflecting extension of oil production cuts.
  - Sudan: 2024 growth revised markedly downward owing to persisting conflict.
  - Nigeria: 2024 outlook revised down by 0.2 percentage point amid weaker-than-expected Q1 activity.

### Trade, commodities, and inflation dynamics
- World trade growth: expected to recover to about 3¼ percent annually in 2024–25 (from quasi stagnation in 2023).
- Commodity price assumptions:
  - IMF staff projections are based on upward revisions to commodity prices, including a rise in nonfuel prices by 5 percent in 2024.
  - Energy commodity prices are expected to fall by about 4.6 percent in 2024, less than projected in the April WEO.
- Inflation:
  - Momentum on global disinflation is slowing because of persistent higher-than-average inflation in services prices, while goods prices show stronger disinflation.
  - Nominal wage growth remains brisk and is above price inflation in some countries.
  - Headline inflation in advanced economies is expected to return to target by the end of 2025.
  - Inflation is expected to remain higher and decline more slowly in emerging market and developing economies than in advanced economies, though median emerging market and developing economy inflation is already close to prepandemic levels partly thanks to falling energy prices.

### Risks to the outlook
- Near-term upside risks to inflation:
  - Persistence of services inflation driven by wage and price setting in labor-intensive services.
  - Escalation of trade or geopolitical tensions that could raise imported goods costs along supply chains.
  - Bumpiness in disinflation that could destabilize expectations and delay return to price stability.
- Higher-for-even-longer interest rate prospects increase external, fiscal, and financial risks:
  - Prolonged dollar appreciation disrupting capital flows and impeding planned monetary easing.
  - Higher borrowing costs and potential effects on financial stability if fiscal improvements do not offset higher real rates amid lower potential growth.
- Political uncertainty and election-driven policy swings could:
  - Raise fiscal profligacy risks, worsen debt dynamics, raise long-term yields, and increase protectionism with negative cross-border spillovers.

### Policy recommendations and sequencing
- Near-term policy priorities:
  - Central banks in countries with materialized upside inflation risks should refrain from easing too early and remain open to further tightening if necessary.
  - Where inflation data signal a durable return to price stability, monetary easing should proceed gradually to provide room for fiscal consolidation.
  - Fiscal authorities should adhere to fiscal consolidation commitments, supported by sound fiscal frameworks and resource mobilization.
- Emerging market and developing economies:
  - Allow exchange rates to adjust while using monetary policy to keep inflation close to target.
  - Use foreign reserves prudently and preserve them to deal with potential future outflows, in line with the IMF’s Integrated Policy Framework.
  - Apply macroprudential policies to mitigate vulnerabilities from large exposures to foreign-currency-denominated debt.
- Medium-term structural priorities:
  - Revitalize medium-term growth by enhancing business dynamism and reducing resource misallocation.
  - Boost labor supply by better integrating women and immigrants and leverage diaspora networks and remittances where applicable.
  - Scale back inward and domestically oriented trade-distorting policies, strengthen the multilateral trading system, and promote multilateral cooperation to tackle global challenges such as climate change.

### Key statistics and projections (selected exact values from the source)
- Global growth: 3.2 percent (2024); 3.3 percent (2025).
- United States: 2.6 percent (2024); 1.9 percent (2025).
- Euro area: 0.9 percent (2024); 1.5 percent (2025).
- Japan: 0.7 percent (2024 estimate in table context); downward revision of 0.2 percentage point for 2024 noted in text.
- China: 5.0 percent (2024); 4.5 percent (2025); medium-term 3.3 percent by 2029.
- India: 7.0 percent (2024).
- World trade growth: about 3¼ percent annually in 2024–25.
- Nonfuel prices: rise by 5 percent in 2024 (IMF staff projection).
- Energy commodity prices: expected to fall by about 4.6 percent in 2024.
- Headline inflation in advanced economies: expected to return to target by the end of 2025.
- Aggregate sample for sequential core inflation figure: includes 11 advanced economies and 9 emerging market and developing economies that account for approximately 55 percent of 2021 world output at purchasing-power-parity weights.

### Section 2 — Assumed oil price and inflation inputs
- Average assumed price of oil in US dollars a barrel, based on futures markets (as of May 20, 2024): $81.26 in 2024 and $76.38 in 2025.
- Assumed inflation rates:
  - Euro area: 2.4% in 2024 and 2.1% in 2025.
  - Japan: 2.4% in 2024 and 2.0% in 2025.
  - United States: 3.1% in 2024 and 2.0% in 2025.

### Global financial stability update — key developments and market dynamics
- Central bank posture and policy expectations:
  - Persistently elevated uncertainty around the inflation outlook has led central banks in major advanced economies to become somewhat more cautious about the pace of policy easing, compared with their positions at the end of the first quarter.
  - Markets’ expectations of the number of policy rate cuts to be delivered in 2024 have been revised downward.
  - A cut is assumed to be of the magnitude of 25 basis points.
- Interest rates and yields:
  - Longer-term yields have generally moved in tandem with repricing of policy paths.
  - In the US, medium- to long-term yields have remained unchanged, on net, since April, but have experienced transitory bouts of upward pressure via moves in real rates, partly due to fluctuations in demand for Treasuries given structural shifts in the Treasuries market’s investor base.
  - Uncertainty around the path of long-term US real rates—measured by the level of the real risk premium—remains elevated compared with the historical average.
- Exchange rates and currency pressures:
  - Developments in interest rates have led to gyrations of the exchange rate for the US dollar against major advanced economy currencies since April.
  - The Japanese yen has seen sustained depreciation pressures against the dollar over this period, characterized by excessive moves in the currency and subsequent market interventions by the authorities.
  - Emerging market currencies have been subject to depreciation pressures broadly, though some emerging market currencies with relatively more robust economic outlooks, or those exporting commodities like copper used in hardware enabling artificial intelligence technology, have been able to offset depreciation pressures.
- Capital flows and external financing:
  - Emerging markets have experienced net capital outflows since April, while showing some sensitivity to changes in expectations for the US policy path.
  - Even as international sovereign bond issuance has slowed, a few frontier markets have been prefinancing redemptions due in the next quarter despite elevated financing costs to mitigate anticipated refinancing risk.
  - A narrow definition of capital flows is used here, restricted to portfolio flows only, owing to lags in official data availability.
- Risk assets and corporate sector:
  - Risk assets have appreciated from elevated levels of the first quarter, driven in part by resilient corporates.
  - Solid corporate profits have driven valuations in US and euro area equities higher, as companies in most sectors have posted upside earnings surprises.
  - Equity valuations in major emerging markets have been mixed, while corporate spreads continue to remain tight across most regions.
  - Buoyant corporate valuations have kept financial conditions accommodative.
  - A slower pace of policy easing in the US and other advanced economies, amid continued uncertainty around the global economic outlook, could exacerbate financial market volatility and challenge these valuations.
  - Emerging market currencies may come under further pressure with narrowing of interest rate differentials against the US.

### Selected economies — Real GDP growth (Percent change) and differences from April 2024 WEO projections
- Note: The selected economies account for approximately 83 percent of world output. Data and forecasts for entries marked are presented on a fiscal year basis. Difference based on rounded figures for the current and April 2024 WEO forecasts.
- Argentina 5.0 –1.6 –3.5 5.0 –0.7 0.0
- Australia 3.9 2.0 1.4 2.0 –0.1 0.0
- Brazil 3.0 2.9 2.1 2.4 –0.1 0.3
- Canada 3.8 1.2 1.3 2.4 0.1 0.1
- China 3.0 5.2 5.0 4.5 0.4 0.4
- Egypt 2/ 6.7 3.8 2.7 4.1 –0.3 –0.3
- France 2.6 1.1 0.9 1.3 0.2 –0.1
- Germany 1.8 –0.2 0.2 1.3 0.0 0.0
- India 2/ 7.0 8.2 7.0 6.5 0.2 0.0
- Indonesia 5.3 5.0 5.0 5.1 0.0 0.0
- Iran 2/ 3.8 4.6 3.3 3.1 0.0 0.0
- Italy 4.0 0.9 0.7 0.9 0.0 0.2
- Japan 1.0 1.9 0.7 1.0 –0.2 0.0
- Kazakhstan 3.3 5.1 3.5 4.6 0.4 –1.0
- Korea 2.6 1.4 2.5 2.2 0.2 –0.1
- Malaysia 8.9 3.6 4.4 4.4 0.0 0.0
- Mexico 3.7 3.2 2.2 1.6 –0.2 0.2
- Netherlands 4.3 0.1 0.7 1.5 0.1 0.2
- Nigeria 3.3 2.9 3.1 3.0 –0.2 0.0
- Pakistan 2/ 6.2 –0.2 2.0 3.5 0.0 0.0
- Philippines 7.6 5.5 6.0 6.2 –0.2 0.0
- Poland 5.6 0.2 3.1 3.5 0.0 0.0
- Russia –1.2 3.6 3.2 1.5 0.0 –0.3
- Saudi Arabia 7.5 –0.8 1.7 4.7 –0.9 –1.3
- South Africa 1.9 0.7 0.9 1.2 0.0 0.0
- Spain 5.8 2.5 2.4 2.1 0.5 0.0
- Thailand 2.5 1.9 2.9 3.1 0.2 0.2
- Türkiye 5.5 4.5 3.6 2.7 0.5 –0.5
- United Kingdom 4.3 0.1 0.7 1.5 0.2 0.0
- United States 1.9 2.5 2.6 1.9 –0.1 0.0

*International Monetary Fund, World Economic Outlook Update, July 2024 — Section 1 text.*

### Section 1

### The Global Economy in a Sticky Spot

### Overview
- Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025.
- Varied momentum at the turn of the year has somewhat narrowed output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential.
- Services price inflation is holding up progress on disinflation, complicating monetary policy normalization and raising the prospect of higher-for-even-longer interest rates.
- Global financial conditions remain accommodative despite a general upward drift in longer-term yields; buoyant corporate valuations have kept overall conditions broadly at the level of the April WEO.

### Growth projections and near-term developments
- Global growth: 3.2 percent in 2024 and 3.3 percent in 2025 (broadly unchanged from April).
- United States: projected growth revised to 2.6 percent in 2024 (0.1 percentage point lower than April); 1.9 percent in 2025 as labor market cools and consumption moderates.
- Euro area: modest pickup of 0.9 percent expected for 2024 (an upward revision of 0.1 percentage point); 1.5 percent in 2025.
- Japan: 2024 growth revised downward by 0.2 percentage point, reflecting temporary supply disruptions and weak private investment in Q1.
- Emerging Market and Developing Economies: forecast revised upward, powered by stronger activity in Asia.
  - China: growth forecast revised upward to 5 percent in 2024; 4.5 percent in 2025; medium-term deceleration to 3.3 percent by 2029.
  - India: growth revised upward to 7.0 percent in 2024 (calendar-year projections noted elsewhere in the source).
- Regional revisions:
  - Brazil: 2024 growth revised downward (near-term impact of flooding); 2025 revised up to reflect reconstruction and hydrocarbon production acceleration.
  - Mexico: 2024 growth revised downward due to moderation in demand.
  - Saudi Arabia: 2024 growth revised downward by 0.9 percentage point, mainly reflecting extension of oil production cuts.
  - Sudan: 2024 growth revised markedly downward owing to persisting conflict.
  - Nigeria: 2024 outlook revised down by 0.2 percentage point amid weaker-than-expected Q1 activity.

### Trade, commodities, and inflation dynamics
- World trade growth: expected to recover to about 3¼ percent annually in 2024–25 (from quasi stagnation in 2023).
- Commodity price assumptions:
  - IMF staff projections are based on upward revisions to commodity prices, including a rise in nonfuel prices by 5 percent in 2024.
  - Energy commodity prices are expected to fall by about 4.6 percent in 2024, less than projected in the April WEO.
- Inflation:
  - Momentum on global disinflation is slowing because of persistent higher-than-average inflation in services prices, while goods prices show stronger disinflation.
  - Nominal wage growth remains brisk and is above price inflation in some countries.
  - Headline inflation in advanced economies is expected to return to target by the end of 2025.
  - Inflation is expected to remain higher and decline more slowly in emerging market and developing economies than in advanced economies, though median emerging market and developing economy inflation is already close to prepandemic levels partly thanks to falling energy prices.

### Risks to the outlook
- Near-term upside risks to inflation have gained prominence, tied to:
  - Persistence of services inflation driven by wage and price setting in labor-intensive services.
  - Escalation of trade or geopolitical tensions that could raise imported goods costs along supply chains.
  - Bumpiness in disinflation that could destabilize expectations and delay return to price stability.
- Higher-for-even-longer interest rate prospects increase external, fiscal, and financial risks, including:
  - Prolonged dollar appreciation disrupting capital flows and impeding planned monetary easing.
  - Higher borrowing costs and potential effects on financial stability if fiscal improvements do not offset higher real rates amid lower potential growth.
- Political uncertainty and election-driven policy swings could raise fiscal profligacy risks, worsen debt dynamics, raise long-term yields, and increase protectionism with negative cross-border spillovers.

### Policy recommendations and sequencing
- Near-term policy priorities:
  - Central banks in countries with materialized upside inflation risks should refrain from easing too early and remain open to further tightening if necessary.
  - Where inflation data signal a durable return to price stability, monetary easing should proceed gradually to provide room for fiscal consolidation.
  - Fiscal authorities should adhere to fiscal consolidation commitments, supported by sound fiscal frameworks and resource mobilization.
- Emerging market and developing economies:
  - Allow exchange rates to adjust while using monetary policy to keep inflation close to target.
  - Use foreign reserves prudently and preserve them to deal with potential future outflows, in line with the IMF’s Integrated Policy Framework.
  - Apply macroprudential policies to mitigate vulnerabilities from large exposures to foreign-currency-denominated debt.
- Medium-term structural priorities:
  - Revitalize medium-term growth by enhancing business dynamism and reducing resource misallocation.
  - Boost labor supply by better integrating women and immigrants and leverage diaspora networks and remittances where applicable.
  - Scale back inward and domestically oriented trade-distorting policies, strengthen the multilateral trading system, and promote multilateral cooperation to tackle global challenges such as climate change.

### Key statistics and projections (selected exact values from the source)
- Global growth: 3.2 percent (2024); 3.3 percent (2025).
- United States: 2.6 percent (2024); 1.9 percent (2025).
- Euro area: 0.9 percent (2024); 1.5 percent (2025).
- Japan: 0.7 percent (2024 estimate in table context); downward revision of 0.2 percentage point for 2024 noted in text.
- China: 5.0 percent (2024); 4.5 percent (2025); medium-term 3.3 percent by 2029.
- India: 7.0 percent (2024).
- World trade growth: about 3¼ percent annually in 2024–25.
- Nonfuel prices: rise by 5 percent in 2024 (IMF staff projection).
- Energy commodity prices: expected to fall by about 4.6 percent in 2024.
- Headline inflation in advanced economies: expected to return to target by the end of 2025.
- Aggregate sample for sequential core inflation figure: includes 11 advanced economies and 9 emerging market and developing economies that account for approximately 55 percent of 2021 world output at purchasing-power-parity weights.

*Source: International Monetary Fund, World Economic Outlook Update, July 2024 — Section 1 text.*

### Section 2

### text - Section 2

### Assumed oil price and inflation inputs
- The average assumed price of oil in US dollars a barrel, based on futures markets (as of May 20, 2024), is $81.26 in 2024 and $76.38 in 2025.
- The assumed inflation rates:
  - Euro area: 2.4% in 2024 and 2.1% in 2025.
  - Japan: 2.4% in 2024 and 2.0% in 2025.
  - United States: 3.1% in 2024 and 2.0% in 2025.

### Global financial stability update — key developments and market dynamics
- Central bank posture and policy expectations:
  - Persistently elevated uncertainty around the inflation outlook has led central banks in major advanced economies to become somewhat more cautious about the pace of policy easing, compared with their positions at the end of the first quarter.
  - Markets’ expectations of the number of policy rate cuts to be delivered in 2024 have been revised downward.
  - A cut is assumed to be of the magnitude of 25 basis points.
- Interest rates and yields:
  - Longer-term yields have generally moved in tandem with repricing of policy paths.
  - In the US, medium- to long-term yields have remained unchanged, on net, since April, but have experienced transitory bouts of upward pressure via moves in real rates, partly due to fluctuations in demand for Treasuries given structural shifts in the Treasuries market’s investor base.
  - Uncertainty around the path of long-term US real rates—measured by the level of the real risk premium—remains elevated compared with the historical average.
- Exchange rates and currency pressures:
  - Developments in interest rates have led to gyrations of the exchange rate for the US dollar against major advanced economy currencies since April.
  - The Japanese yen has seen sustained depreciation pressures against the dollar over this period, characterized by excessive moves in the currency and subsequent market interventions by the authorities.
  - Emerging market currencies have been subject to depreciation pressures broadly, though some emerging market currencies with relatively more robust economic outlooks, or those exporting commodities like copper used in hardware enabling artificial intelligence technology, have been able to offset depreciation pressures.
- Capital flows and external financing:
  - Emerging markets have experienced net capital outflows since April, while showing some sensitivity to changes in expectations for the US policy path.
  - Even as international sovereign bond issuance has slowed, a few frontier markets have been prefinancing redemptions due in the next quarter despite elevated financing costs to mitigate anticipated refinancing risk.
  - A narrow definition of capital flows is used here, restricted to portfolio flows only, owing to lags in official data availability.
- Risk assets and corporate sector:
  - Risk assets have appreciated from elevated levels of the first quarter, driven in part by resilient corporates.
  - Solid corporate profits have driven valuations in US and euro area equities higher, as companies in most sectors have posted upside earnings surprises.
  - Equity valuations in major emerging markets have been mixed, while corporate spreads continue to remain tight across most regions.
  - Buoyant corporate valuations have kept financial conditions accommodative.
  - A slower pace of policy easing in the US and other advanced economies, amid continued uncertainty around the global economic outlook, could exacerbate financial market volatility and challenge these valuations.
  - Emerging market currencies may come under further pressure with narrowing of interest rate differentials against the US.

### Selected economies — Real GDP growth (Percent change) and differences from April 2024 WEO projections
- Note: The selected economies account for approximately 83 percent of world output. Data and forecasts for entries marked are presented on a fiscal year basis. Difference based on rounded figures for the current and April 2024 WEO forecasts.
- Argentina 5.0 –1.6 –3.5 5.0 –0.7 0.0
- Australia 3.9 2.0 1.4 2.0 –0.1 0.0
- Brazil 3.0 2.9 2.1 2.4 –0.1 0.3
- Canada 3.8 1.2 1.3 2.4 0.1 0.1
- China 3.0 5.2 5.0 4.5 0.4 0.4
- Egypt 2/ 6.7 3.8 2.7 4.1 –0.3 –0.3
- France 2.6 1.1 0.9 1.3 0.2 –0.1
- Germany 1.8 –0.2 0.2 1.3 0.0 0.0
- India 2/ 7.0 8.2 7.0 6.5 0.2 0.0
- Indonesia 5.3 5.0 5.0 5.1 0.0 0.0
- Iran 2/ 3.8 4.6 3.3 3.1 0.0 0.0
- Italy 4.0 0.9 0.7 0.9 0.0 0.2
- Japan 1.0 1.9 0.7 1.0 –0.2 0.0
- Kazakhstan 3.3 5.1 3.5 4.6 0.4 –1.0
- Korea 2.6 1.4 2.5 2.2 0.2 –0.1
- Malaysia 8.9 3.6 4.4 4.4 0.0 0.0
- Mexico 3.7 3.2 2.2 1.6 –0.2 0.2
- Netherlands 4.3 0.1 0.7 1.5 0.1 0.2
- Nigeria 3.3 2.9 3.1 3.0 –0.2 0.0
- Pakistan 2/ 6.2 –0.2 2.0 3.5 0.0 0.0
- Philippines 7.6 5.5 6.0 6.2 –0.2 0.0
- Poland 5.6 0.2 3.1 3.5 0.0 0.0
- Russia –1.2 3.6 3.2 1.5 0.0 –0.3
- Saudi Arabia 7.5 –0.8 1.7 4.7 –0.9 –1.3
- South Africa 1.9 0.7 0.9 1.2 0.0 0.0
- Spain 5.8 2.5 2.4 2.1 0.5 0.0
- Thailand 2.5 1.9 2.9 3.1 0.2 0.2
- Türkiye 5.5 4.5 3.6 2.7 0.5 –0.5
- United Kingdom 4.3 0.1 0.7 1.5 0.2 0.0
- United States 1.9 2.5 2.6 1.9 –0.1 0.0

*International Monetary Fund | July 2024*

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_Source: https://www.imf.org/-/media/files/publications/weo/2024/update/july/english/text.pdf_