IMF boosts US growth forecasts, trims China and Germany

• Global growth 3.2% vs 3.2% in July forecast
• US growth seen at 2.3% for 2024 vs 2.6% in July
• US 2025 growth seen at 2.2% for 2025 vs 1.9% in July
• China growth at 4.8% for 2024 vs 5.0% in July
• Euro Zone growth at 0.8% for 2024 vs 0.9% in July, 1.2% for 2025 vs 1.5% in July
• German economy expected to stagnate this year vs 0.2% growth forecast previously
• German GDP expected to grow by 0.8% in 2025 vs 1.3% forecast previously
• BOJ expected to maintain gradual rate hiking path
• Japan’s growth outlook cut to 0.3% for 2024 (prev. 0.7%)
• Forecasts India growth at 7.0% for 2024, 6.3% for 2025, both unchanged from July

The IMF said the inflation battle ‘has largely been won,’ on track to return to 2% target in 2025 in advanced economies. The downside risks include too-tight monetary policy, spiking commodity prices due to escalation of wars and a further correction in Chinese property market.

They highlight adverse scenario including 10% tariffs between US, China, and Eurozone, tighter financial conditions could reduce global output by 0.8% by 2024, 1.3% by 2026 vs base forecasts.

As for the forecasts, they highlight that Germany is struggling and the US is doing remarkably well. But if you strip out the US, there is a lot of disappointment here. But so long as the US can hold up, the US dollar can outperform.

This article was written by Adam Button at www.forexlive.com.