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Momentum in economies including the United States and India has picked up in recent months, helping fuel optimism that global growth in 2024 will slightly outpace last year, according to research by the Financial Times.
A gauge of the performance of the U.S. economy, which takes into account measures of confidence, financial markets and real activity, has returned to its highest levels since mid-2022, providing a bright spot amid a largely sluggish global economic backdrop .
India has seen a similar recovery, according to the latest edition of the Brookings-FT Tracking Index for the Global Economic Recovery, or Tiger, released twice a year.
The data comes as policymakers prepare to meet in Washington this week for the spring meetings of the IMF and World Bank.
At meetings, the IMF warned of a decade of disappointing growth and a growing risk of popular discontent as central banks continue to battle inflation and governments struggle with high public debt.
Geopolitical risks also weigh heavily on the outlook as economic policymakers prepare to meet in the coming days. These include a worsening situation in the Middle East, after Iran launched a barrage of drones and missiles at Israel in retaliation for a suspected Israeli attack on Damascus.
The fund, led by Kristalina Georgieva, who has just secured a second term as chief executive, will publish updated economic forecasts next week.
These are expected to show stronger growth than the IMF’s previous World Economic Outlook update in January, which suggested global gross domestic product growth would remain at 3.1% in 2024 and only increase incrementally to 3 .2% next year.
Eswar Prasad, a senior fellow at the Brookings Institution, said the Tiger index data provided “positive omens” for a modest recovery in global growth this year from 2023, with the United States emerging as the main driver of this modest improvement in the economy. economic prospects.
Despite the Federal Reserve’s series of interest rate hikes aimed at tamping down inflation, the U.S. economy was “trudging along” and even a mild recession seemed unlikely, Prasad said.
“The United States continues to surprise everyone,” he said. It had proven “remarkably resilient, with a red-hot job market and rising stock prices fueling strong business and consumer confidence, in turn boosting domestic demand.”
The strength of the US economy, combined with persistent inflation, has curbed speculation that the Fed will be able to cut interest rates as early as June. This in turn has led to a reconsideration of the timing with which other major central banks will be willing to scale back their restrictive monetary policy.
India and Japan also emerge from the Tiger analysis with strengthening growth indicators, while major European economies, including Germany and the United Kingdom, remain in weak economic health.
“The global economic recovery is weighed down by geopolitical conflicts, protectionist policies and persistent inflation,” Prasad said.
China is still “flirting with deflation”, he added, with confidence indicators at low levels. Prasad warned that both China and Germany appear to be relying on stronger external demand to support their growth, which risks hampering the recovery and inflaming trade tensions.
The Tiger analysis compares indicators of real activity, financial markets and confidence with their historical averages, for both advanced and emerging economies.