IMF says despite many gloomy predictions, world economy avoided a recession
The International Monetary Fund (IMF) on Tuesday projected higher growth for the UAE economy for next year than in 2023 and 2024, the highest in three years.
The World Economic Outlook released by IMF predicted 4.2 per cent GDP growth for 2025 as compared to 3.5 per cent for 2024 and 3.4 per cent for last year. In 2022, the UAE economy grew 7.9 per cent, bouncing back after the Covid-19 pandemic.
In the post-pandemic era, the UAE’s economy is being mainly driven by confidence in its policies, attracting talent and foreign direct investment from around the world in key sectors, especially real estate, travel and tourism and retail sectors. In addition, high oil prices are also supporting the growth of the economy.
However, the IMF reduced UAE’s GDP growth outlook for 2024 by half a per cent from 4.0 per cent in October 2023 to 3.5 per cent in the latest forecast.
The IMF projected higher growth for most of the oil exporting nations for next year as global geopolitical tensions from the Russia-Ukraine crisis to the Iran-Israel conflict kept the oil prices higher due to disruption fears.
GCC growth projection (%)
Economy 2023 2024 2025
In the UAE, the economic growth rates stood at 3.4%, 3.5%, and 4.2%. Meanwhile, Saudi Arabia experienced growth rates of -0.8%, 2.6%, and 6.0% during the same period. Bahrain’s economy saw growth rates of 2.6%, 3.6%, and 3.2%, while Qatar’s growth rates were 1.6%, 2.0%, and 2.0%. Kuwait’s economic performance fluctuated with growth rates of -2.2%, -1.4%, and 3.8%. Lastly, Oman recorded growth rates of 1.3%, 1.2%, and 3.1%.
Major economies growth projection (%)
Economy 2023 2024 2025
In the USA, the economic growth rates were 2.5%, 2.7%, and 1.9%. Across Europe, growth rates averaged at 1.4%, 1.6%, and 2.0%. The UK experienced growth rates of 0.1%, 0.5%, and 1.5%. Russia’s economy saw growth rates of 3.6%, 3.2%, and 1.8%, while Japan’s growth rates were 1.9%, 0.9%, and 1.0%. India maintained robust growth with rates of 7.8%, 6.8%, and 6.5%. China experienced growth rates of 5.2%, 4.6%, and 4.1%, whereas Pakistan recorded growth rates of -0.2%, 2.0%, and 3.5%.
The IMF said in its World Economic Outlook’s April 2024 edition that despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops.
Moreover, the inflation surge despite its severity and the associated cost-of-living crisis did not trigger uncontrolled wage-price spirals. “Instead, almost as quickly as global inflation went up, it has been coming down,” it said.
According to IMF’s latest projections, growth for 2024 and 2025 will hold steady at around 3.2 per cent, with median headline inflation declining from 2.8 per cent at the end of 2024 to 2.4 per cent at the end of 2025. Most indicators point to a soft landing.
“Even more encouraging, we now estimate that there will be less economic scarring from the pandemic the projected drop in output relative to pre-pandemic projections for most countries and regions, especially for emerging market economies, thanks in part to robust employment growth. Astonishingly, the US economy has already surged past its pre-pandemic trend,” IMF said.
It said China’s economy is affected by the enduring downturn in its property sector.
“Domestic demand will remain lacklustre for some time unless strong measures and reforms address the root cause. Public debt dynamics are also of concern, especially if the property crisis morphs into a local public finance crisis. With depressed domestic demand, external surpluses could rise. The risk is that this will further exacerbate trade tensions in an already fraught geopolitical environment.”
Source: khaleejtimes