IMF says global economy 'limping along' as growth forecast 'lowest in decades'

The International Monetary Fund on Tuesday said the global economy is "limping along" as the growth forecast is the lowest it has been in decades while the financial market struggles to recover from the COVID-19 pandemic and faces uncertainty with war.

"The global economy is limping along, not sprinting," IMF Research Director Pierre-Olivier Gourinchas said. 

He also predicted a "soft landing scenario" where inflation is brought down without a major economic downturn, but said that the "growth forecast is [the] lowest in decades."

Global economic growth is projected to slow to 2.9% in 2024 from 3% expected this year, the IMF said. This prediction is slightly down from the 3% growth that the United Nations agency predicted in July.

Additionally, inflation decreased from 9.2% in 2022 compared to the previous year, and it is currently 5.9%, per the IMF. The agency expects inflation to hit 4.8% in 2024.

Major factors contributing to economic issues include "the pandemic, Russia’s invasion of Ukraine and the cost-of-living crisis," he also said. "In retrospect, the resilience has been remarkable. Despite war-disrupted energy and food markets and unprecedented monetary tightening to combat decades-high inflation, economic activity has slowed but not stalled."

Gourinchas said that it is "too early" to measure the global impact of Hamas' invasion of Israel over the weekend, according to The Associated Press. 

"We’ve seen that in previous crises and previous conflicts. And of course, this reflects the potential risk that there could be disruption either in production or transport of oil in the region," he said. 

If the war continues, a 10% increase in the price of oil could increase global inflation by 0.4% and reduce the growth of the economy by 0.15%, per Gourinchas.

"But again, I emphasize that it’s really too early to jump to any conclusion here," Gourinchas said.

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