The IMF just raised its growth forecast for the US economy this year — but expects a slowdown in 2025
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- The International Monetary Fund raised its growth forecast for the US economy to 2.8% this year.
- It expects slower growth of 2.2% next year as the government cuts back and the job market cools.
- The IMF said aging populations and weak productivity were constraining growth for many countries.
The International Monetary Fund raised its growth forecast for the US, projecting the world's largest economy would expand by 2.8% this year instead of the 2.6% it predicted in July.
in its latest World Economic Outlook released on Tuesday, IMF staff cited stronger consumption fueled by "robust increases in real wages" and wealth effects, along with non-residential investment, as the two main reasons for the increase.
However, they predicted GDP growth would slow to 2.2% in 2025 as the US government curbs its spending and the labor market cools, sapping consumption.
The IMF projected global growth of 3.2% in both 2024 and 2025, virtually unchanged from its previous prediction. They underscored their latest forecast for global growth over the next five years of 3.1% was "mediocre" compared with the pre-pandemic average.
"Persistent structural headwinds — such as population aging and weak productivity — are holding back potential growth in many economies," the agency's staff wrote.
They projected only a slight slowdown in China to 4.8% this year due to resilient net exports, and revised their April forecast for 2025 upward by 0.4 percentage points to 4.5%. They noted the Chinese government's stimulus measures "may provide upside risk to near-term growth."
The UN financial agency said that growth in the euro area appears to have troughed in 2023, and it anticipates an acceleration to 0.8% expansion in 2024 driven by stronger exports, then 1.2% in 2025 on the back of improved domestic demand.
IMF staff made downward revisions to its growth outlook for the Middle East, Central Asia, and sub-Saharan Africa, citing disruptions to the production and shipping of oil and other commodities as well as "conflicts, civil unrest, and extreme weather events."
In contrast, they upgraded their April forecasts for emerging and developing Asia by 0.3 percentage points for both 2024 and 2025, to 5.4% and 5.0%. They cited "surging demand for semiconductors and electronics, driven by significant investments in artificial intelligence, has bolstered growth."