On Tuesday, the International Monetary Fund (IMF) released its latest World Economic Outlook, where it revised the growth forecast of the United States. It predicted a higher rate of growth but a slower expansion for the eurozone.
The US Growth projection increased by 0.3 percentage points, as compared to July updates, which was 2.1%. The forecast for next year is higher by 0.5 percentage points to 1.5%. On the other hand, the IMF revised the 2023 growth forecast for the eurozone by 0.2 percentage points to 0.7%. The growth forecast for 2024 also came down by 0.3 percentage points to 1.2%.
According to CNBC,
“(The IMF) attributed the U.S. upgrade to stronger business investment in the second quarter, resilient consumption growth amid a tight labor market, and an expansionary government fiscal stance. Growth is nonetheless expected to slow in the second half of 2023 and into 2024, it added, due to slower wage growth, dwindling pandemic savings, tight monetary policy, and higher unemployment.”
On the other hand, in the eurozone, according to the IMF, there shall be divergence across its major economies this year. For instance, with a slowing down of trade and a drag of higher rates of interest, the German economy might contract. Furthermore, there is a higher external demand in France, and its industrial production has caught up.
In addition to that, the IMF also slightly increased the 2023 growth forecast for the United Kingdom to 0.5%. However, it lowered the 2024 growth forecast by 0.4 percentage points to 0.6%.
Throughout, the 2023 global growth forecast is 3%, while the 2024 forecast will lower by 0.1 percentage points to 2.9%.
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