While the latest forecast released by the International Monetary Fund (IMF) does suggest global growth is likely to remain below its long-term historic average, the update did strike a relatively optimistic note with the organisation’s Chief Economist saying a global “soft landing” was in sight.
Global growth upgraded
In its first assessment of world economic prospects published this year, the IMF edged up its forecast for global economic growth with the improvement largely driven by inflation easing more quickly than previously anticipated. The international soothsayer said it now expects the world economy to
grow by 3.1% over the course of 2024, up two-tenths of a percentage point from its previous forecast last autumn.
Evenly balanced risks
The IMF also noted that risks to growth prospects are now broadly balanced, with faster disinflation and looser than necessary fiscal policy during ‘the biggest global election year in history’ both cited as potential upside factors that could boost growth. On the downside, new commodity price spikes due to geopolitical tensions in the Middle East and continued attacks in the Red Sea could result in more persistent underlying inflation and thereby prolong tight monetary conditions, while deepening property sector woes in China could also lead to growth disappointments.
Remarkable resilience
Overall, however, the IMF suggested the likelihood of a ‘hard landing’ had receded. Indeed, the organisation’s Chief Economist, Pierre-Olivier Gourinchas, noted that the global economy “continues to display remarkable resilience, with inflation declining steadily and growth holding up.” He concluded, “We are very far from a global recession scenario.”
Investment fundamentals
An improving economic outlook should certainly provide opportunities for investors this year, although the key to successful investing will undoubtedly remain the adoption of a carefully considered strategy based on sound financial planning principles.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
