IMF cuts growth forecast for China, Eurozone

The news: The International Monetary Fund says overall global growth remained low and uneven despite the strength of the US economy and has cut its growth forecasts for China and the euro zone.

The numbers: In its latest World Economic Outlook, the IMF left its forecast for global real GDP growth in 2023 unchanged at 3.0% but cut its 2024 forecast to 2.9% from its a forecast of 3.0% made in July. It raised the forecast for US growth by 0.3 percentage points to 2.1% for 2023, and by 0.5 percentage point to 1.5% for next year. China is forecast to grow 5.0% in 2023 but slow to 4.2% in 2024, 0.2 and 0.3 percentage points less than previously expected, while estimates for euro zone growth were cut to 0.7% in 2023 and 1.2% in 2024, from July forecasts of 0.9% and 1.5%.

The context: IMF chief economist Pierre-Olivier Gourinchas said the global economy continued to recover from COVID-19, Russia's invasion of Ukraine and last year's energy crisis, but that diverging growth trends meant "mediocre" medium-term prospects. The forecasts generally pointed to a soft landing, but the IMF remained concerned about risks related to China's property crisis, volatile commodity prices, geopolitical fragmentation and a resurgence in inflation, which is expected to drop to an annual average of 6.9% in 2023 from 8.7% in 2022. It said uncertainty had narrowed since its April forecasts, but there were still more downside than upside risks for 2024.

What they said: "The global economy is showing resilience. It's not knocked out by the big shocks it's experienced in the last two or three years, but it's not doing too great either. We see a global economy that is limping along and it's not quite sprinting yet," IMF chief economist Pierre-Olivier Gourinchas told Reuters.