IMF lowers world economic growth forecast, raises China growth forecast

According to Xinhua News Agency, New York, July 8th (reporters Liu Yanan and Xu Jing), the International Monetary Fund (IMF) released an update to its World Economic Outlook report on July 8th, slightly lowering its forecast for world economic growth this year and raising its forecast for China's economic growth to 4.6%.

The IMF predicts that the world economy will grow by 3% in 2026, which is 0.1 percentage points lower than the April forecast. This is the IMF's second downward adjustment of its world economic growth forecast for this year, following a 0.2 percentage point reduction in April. The IMF stated that this downward adjustment reflects the impact of the Middle East conflict, but due to the development and application of artificial intelligence, demand driven growth in the global technology sector is accelerating, partially offsetting the negative impact of the conflict.

The IMF believes that the risk of a global economic downturn remains evident. The possibility of further escalation of geopolitical tensions still exists. If war breaks out again, it will exacerbate commodity price fluctuations, further threaten supply chain security, push up inflation, and drag down the financial environment. However, if the recovery of shipping in the Strait of Hormuz goes smoothly than expected, and the increase in commodity prices is lower than expected, the economic growth rate may be higher than expected.

According to the latest IMF forecast, developed economies, emerging markets, and developing economies will grow by 1.7% and 3.8% respectively this year, all 0.1 percentage points lower than previously expected. Specifically, the IMF lowered its economic growth forecast for the Middle East and Central Asia by 1.2 percentage points to 0.7%, the eurozone by 0.2 percentage points to 0.9%, the United States remained unchanged at 2.3%, and China raised it by 0.2 percentage points to 4.6%.

Against the backdrop of an overall downward adjustment in global economic growth expectations, China is one of the few major economies whose growth expectations have been raised. The IMF report mentioned that China's economic performance exceeded expectations, mainly due to the impressive performance of China's high-tech manufacturing industry, while related exports strongly boosted the economy.

The updated report also shows that the overall global inflation rate will rise from 4.1% last year to 4.7% this year, and will fall back to 3.9% in 2027. The IMF pointed out that the main driving factors for price increases this year are energy and food prices, and inflation is expected to remain uneven among different countries.