Policymakers who feared they would need to hit the brakes on economic growth to contain rising prices have managed to tame inflation without tipping the world into a recession. The I.M.F. expects global inflation to fall to 5.8 percent this year and 4.4 percent in 2025 from 6.8 percent in 2023. It estimates that 80 percent of the world’s economies will experience lower annual inflation this year.
The brighter outlook is due largely to the strength of the U.S. economy, which grew 3.1 percent last year. That robust growth came despite the Fed’s aggressive series of rate increases, which raised borrowing costs to their highest levels in 22 years. Consumer spending in America has held strong while businesses have continued to invest. The I.M.F. now expects the U.S. economy to grow 2.1 percent this year, up from its previous prediction of 1.5 percent.
China’s economy is also growing faster than previously thought and is projected to grow 4.6 percent this year. I.M.F. officials said the difficulties facing China’s property sector had not slowed the economy as much as they predicted; the Chinese government, they noted, has provided “significant” fiscal support.
Other large economies, such as India and Brazil, also appear to be performing better than was forecast. Perhaps most surprising, Russia, which has faced a barrage of Western sanctions and export restrictions since its invasion of Ukraine in February 2022, received the biggest upgrade of all the countries tracked by the I.M.F. Despite the coordinated effort to cripple its economy, Russia’s economy is expected to grow by a healthy 2.6 percent this year.
Still, sluggishness persists among some major economies. Geopolitical crises and industrial rivalries have been particularly hard on the eurozone, where fresh data released Tuesday showed the economy stagnated in the final three months of 2023 and grew by just 0.1 percent for the year.