Everything you need to know about the IMF’s latest World Economic Outlook update

IMF holds global growth forecast steady: The International Monetary Fund maintained its 2024 global growth outlook at 3.2% in its updated World Economic Outlook (pdf) and slightly upgraded its 2025 outlook to 3.3%.

The regional outlook: The Fund slashed Saudi Arabia’s growth outlook for the year by 0.9 percentage points to 1.7% and next year’s by 1.3 percentage points to 4.7%, mainly due to the extension of oil production cuts. This downgrade dragged the regional outlook for 2024 to 2.4%, down 0.4 percentage points from April’s forecast.

Where do major economies stand? Both the US and Japan saw their outlook slashed — the US saw its 2024 forecast trimmed 0.1 percentage points to 2.6% thanks to “a sharper-than-expected slowdown in growth reflected moderating consumption and a negative contribution from net trade.” Meanwhile, the Fund sees the Japanese economy growing at a 0.7% clip this year, down 0.2 percentage points from April’s forecast due to “temporary supply disruptions linked to the shutdown of a major automobile plant in the first quarter.”

It’s a different story for the Eurozone, which saw its 2024 growth revised upwards 0.1 percentage points to 0.9%, mainly driven by a more optimistic growth outlook for France and Spain.

Also revised upwards, was growth in India and China — which accounted for close to half of global growth. The Fund sees the Chinese economy growing 5.0% in 2024 — a 0.4 percentage points upgrade from its April forecast — and India growing 7.0% after a 0.2 percentage points upwards revision,

Words of wisdom for EMs: “In emerging markets and developing economies, recent policy divergences highlight the need to manage the risks of currency and capital flow volatility. Given that economic fundamentals remain the main factor in USD appreciation, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to keep inflation close to target,” the report read.

The inflation outlook: “We project global inflation will slow to 5.9% this year from 6.7% last year, broadly on track for a soft landing. But in some advanced economies, especially the United States, progress on disinflation has slowed, and risks are to the upside,” IMF chief economist Pierre-Olivier Gourinchas said in a blogpost.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning, with the ASX 200 up, the Nikkei and Hang Seng flat, and both the Kospi and Shanghai Composite in the red. Futures for major US and European equities benchmarks were largely unchanged overnight.

THE CLOSING BELL-

The ADX rose 0.1% yesterday on turnover of AED 1.4 bn. The index is down 4.4% YTD.

In the green: Commercial Bank International (+9.3%), Agility Global (+8.8%) and Aram Group (+7.3%).

In the red: Oman and Emirates Investment Holding (-4.8%), Rak Co. for White Cement and Construction Materials (-3.5%) and Gulf Cement (-3.5%).

Over on the DFM, the index fell 0.1% on turnover of AED 369.7 mn. Meanwhile Nasdaq Dubai closed up 0.4%.