"2024 is shaping up to be one of the best economic years of many Americans’ lifetimes," per the Washington Post

The U.S. economy is set to continue driving global growth for the rest of this year and into 2025, largely fueled by strong consumer spending that has remained resilient despite inflation and high interest rates aimed at controlling it, the International Monetary Fund (IMF) said on Tuesday.

In its latest World Economic Outlook, the IMF upgraded its economic growth forecasts for the U.S. for both 2024 and 2025—making it the only advanced economy to receive such an adjustment. According to the IMF’s chief economist, the Federal Reserve’s goal of achieving a “soft landing,” where inflation eases without severely harming the job market, has largely been accomplished.

Emerging economies like India and Brazil also saw growth projections raised, while the IMF lowered its expectations for China for this year, leaving its 2025 growth forecast at 4.5%, below historical trends. However, the IMF warned of risks, including potential armed conflicts, new trade wars, and the lingering effects of tight monetary policies enacted by the Federal Reserve and other central banks to curb inflation.

"Today, the IMF reported that the United States is leading advanced economies in growth for the second consecutive year," said Lael Brainard, director of the White House's National Economic Council.

While the IMF maintained its global GDP growth forecast for 2024 at 3.2%, the projected growth for 2025 has been slightly reduced to 3.2%, and medium-term growth is expected to decline to 3.1%, far below pre-pandemic trends. Despite these global concerns, the IMF's chief economist, Pierre-Olivier Gourinchas, highlighted U.S. resilience.

"The news from the U.S. is very positive," Gourinchas said at a press conference in Washington, noting that the labor market remains strong even as it cools down. He added that the risk of a U.S. recession, absent a major shock, is diminishing.

Although Gourinchas believes the global fight against inflation has mostly been won, he cautioned that monetary policy could inadvertently become too restrictive without timely interest rate cuts in some countries, which could hamper growth and employment.

The IMF revised its 2024 U.S. growth forecast upwards to 2.8%, attributing it to stronger-than-expected consumer spending, driven by rising wages and asset values. The 2025 U.S. growth outlook was also raised to 2.2%, slightly delaying a return to trend growth.

Brazil received a significant upgrade, with its growth forecast for 2023 increased to 3.0%, thanks to strong private consumption and investment. Meanwhile, Mexico’s growth forecast was lowered to 1.5% due to the impact of tighter monetary policy.

The IMF also cut China’s 2024 growth forecast to 4.8%, as ongoing weakness in the property sector and low consumer confidence offset gains from net exports. China’s 2025 growth forecast remained unchanged and does not account for the effects of Beijing's recently announced fiscal stimulus plans, which are still vague.

Germany is projected to experience zero growth this year, with its forecast downgraded due to ongoing challenges in the manufacturing sector. This revision contributed to a slight reduction in the eurozone’s overall growth forecast, which now stands at 0.8% for 2024 and 1.2% for 2025, despite a positive revision for Spain, whose forecast rose to 2.9%.

The U.K., facing long-term economic struggles, saw its 2024 growth forecast increased to 1.1% as falling inflation and lower interest rates are expected to boost consumer demand. Japan's growth outlook for 2024 was lowered to 0.3%, impacted by lingering supply chain disruptions.

India continues to shine, maintaining its position as the fastest-growing major economy, with growth projections of 7.0% for 2024 and 6.5% for 2025.

The IMF also flagged potential risks from rising trade barriers. While it did not specifically address U.S. presidential candidate Donald Trump’s proposal to impose tariffs of 10% on global imports and 60% on Chinese goods, the report outlined a scenario involving 10% two-way tariffs between the U.S., eurozone, and China, combined with reduced migration to the U.S. and Europe. This could lower global GDP output by 0.8% in 2025 and 1.3% in 2026.

The report also raised concerns over potential spikes in oil and commodity prices due to escalating conflicts in the Middle East and Ukraine and cautioned against industrial policies aimed at protecting domestic industries, which it said often fail to deliver long-term economic benefits.