Last week, the International Monetary Fund released their April forecast report, painting a slightly rosier picture than earlier in January. They noted that “the global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability.” 

The world economy is now pegged to grow at 3.2% in 2024 (up from 3.1% expected in January) and 2025 (unchanged from earlier). The minor increase this year is driven mostly by an improvement in the outlook for the U.S. economy (our largest trading partner). 

Momentum from a stronger-than-expected performance by the U.S. in the fourth quarter of 2023 is expected to carry into this year with 2.7% annual GDP growth (a 0.6 percentage point revision from before) and lead the charge for all major advanced economies in 2024. Growth is expected to slow to 1.9% in 2025 “as gradual fiscal tightening and a softening in labor markets slow aggregate demand.”

On the home front, the IMF pegs the Canadian economy to grow 1.2% this year (stronger than our forecast of 0.8% released last month) before picking up steam with 2.3% growth in 2025. 

Looking east, the Euro area is poised to rise by only 0.8% in 2024 and 1.5% in 2025 with persistently weaker consumer sentiment in Germany. China’s economy, on the other hand, is expected to slow from 5.2% growth in 2023 to 4.6% this year and 4.1% in 2025.

Global inflation is expected to moderate from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. While mostly unchanged from earlier, the forecast for this year is slightly higher than the previous forecast.

Although risks on the horizon are more balanced now than earlier, here are some of the key risks the IMF is worried about: Conflicts such as Gaza-Israel and Russia-Ukraine could clog supply chains and spike commodity prices again, tighter fiscal policy, faltering Chinese growth, rising levels of debt and financial stress, and sticky inflation.

Answer to the previous trivia question: According to Canadabeef.ca, Alberta accounted for 44% of Canada’s 3.56 million beef cows as of January 1, 2023.

Today’s trivia question: Who is the province of Alberta named after?