A senior economist at the International Monetary Fund suggests that the risk of a global recession is small, despite persistent rumblings about geopolitical uncertainty.
The Washington, D.C.-based institute this week raised its global growth forecast slightly higher to 3.2% in 2024 and expects the same rate in 2025.
“When we assess the risks around that baseline, the chances of something like a global recession happening are fairly slim. At this point, it would take a lot to derail this economy. So there has been tremendous resilience in terms of growth. Pierre-Olivier Gourincha said, Economic advisor and director of the International Monetary Fund's research department, to CNBC's Karen Tsu on Tuesday at the group's meeting in New York:
The “bundle of good news” includes strong economic performance by the United States and several emerging market economies, along with inflation falling faster than expected until recently despite weak growth in Europe, Gorinchas said.
He added that there is a difference within Europe, as the International Monetary Fund lowered its growth forecasts for Germany, France, and Italy, but raised them for Spain, Portugal, Belgium, and the United Kingdom.
Growth forecasts since the fall of last year had to take into account increasing geopolitical instability, with tensions in the Middle East clouding the oil market, while Israel's war with the Palestinian Hamas movement in the Gaza Strip led to the disruption of shipping routes in the Red Sea. Through naval attacks from the Yemeni Houthis. This has all come together with the ongoing war between Russia and Ukraine, which will have the biggest broader impact on energy prices in Europe in 2022.
Gorinchas noted that significantly higher oil prices sustained throughout 2024 and more shipment disruptions between Asia and Europe would fuel inflation in 2024, which could prompt central banks to keep interest rates higher for longer and impact global growth.
Economic Advisor and Director of Research Pierre-Olivier Gorincha speaks during the presentation of the International Monetary Fund's World Economic Outlook during the 2024 Spring Meetings of the International Monetary Fund and the World Bank Group in Washington, DC, US on April 16, 2024.
Jalal Jones | Anatolia | Getty Images
According to International Monetary Fund estimates, a continued rise in oil prices by about 15% in 2024 would push global inflation up by about 0.7%, although the value of the commodity has so far proven relatively stable even through the recent rise in tensions between Israel and Israel. And Iran.
Despite the recent positive outlook, Gita Gopinath, deputy managing director of the International Monetary Fund, told CNBC on Tuesday that she assessed geopolitical risks as a “major concern.”
“We have somehow managed the situation so far, and we are not seeing major repercussions from the Middle East. But that is not a given. This is one of the big risks that we see, and the repercussions that could have on oil prices.” “It could be big. If the conflict escalates, it will become a much bigger conflict.”
