How the U.S. Is Fueling Global Growth

According to the IMF, the U.S. economy has become a global growth engine. Even after elevated interest rates fought inflation, it has been able to enjoy a “soft landing” without creating a recession.

IMF Economic Projections

Among the advanced economies, U.S. growth has led the group for two years. Demonstrating optimism, the IMF tweaked its U.S. numbers upward by .2% to 2.8%. Correspondingly, its 2025 outlook projected 2.2% growth, .3% higher than their previous forecast. The reason, they said, was a consumer that earned more and spent more.

Meanwhile, the developing nations’ growth leaders are Brazil and India. Reflecting a .9% boost, Brazil’s projected growth rate is 3%. As for India, the numbers are a whopping 7% for 2024 and 6.5% for 2025.

You can see that the U.S. projection far exceeds its group:

However, all is not rosy. The report also describes what could impede expansion. They are concerned with the impact of tariffs, of war, of less migration, and of financial tightening:

Our Bottom Line: Economic Policy Pivots

The three chapter 174 page World Economic Outlook focuses on projections, policies, inflation, and growth reforms.

Their venture into policy territory takes them to a triple pivot. That pivot has begun with interest rate reversals. After taming inflation, now interest rates could point downward so that unemployment remains low. Next, complementing monetary policy, the fiscal side of policy needs restraint. The worry here is the ascending debt that obliterates much-needed fiscal buffers. Those buffers-spending, taxes, borrowing–compose our fiscal policy toolbox. And finally, in the #3 spot, they cite the “growth-enhancing reforms” that will be the hardest to implement. Aging societies and climate resilience top the growth list targets.

Below, you can see the World Economic Outlook projections expressed as the annual percent change in real GDP growth:

My sources and more: The October 2024 IMF World Economic Outlook had most of today’s facts. However, for a briefer read, this Reuters article and this IMF blog are possibilities.

Our featured image of a “soft landing” (of the U.S. economy) is from travelinsightpedia.com.