US leads global growth in latest IMF Outlook, and other economy stories to read this week

The US economy is set to drive global growth through 2024 and 2025, fuelled by strong consumer spending, according to the International Monetary Fund’s (IMF) latest World Economic Outlook.

The IMF raised the country's growth forecasts to 2.8% for 2024 and 2.2% for 2025, making it the only developed economy to receive upgrades for both years.

Global growth is projected to hold at 3.2% in 2024, down slightly from July's prediction, and expected to drop to 3.1% over the next five years. But, despite geopolitical, trade and other risks, including the possibility of significant tariff hikes and retaliatory actions, the IMF sees resilience in key markets, including Brazil, India and southeast Asia.

"The news on the US is very good in a sense," IMF chief economist Pierre-Olivier Gourinchas said in a Washington press briefing, as reported by Reuters, adding that "the risks of a recession in the US in the absence of a very sharp shock would be somewhat diminished".

US economic activity has remained largely unchanged from September through early October, with a slight increase in hiring, according to the Federal Reserve's latest Beige Book report.

Inflation is slowing down, but the cost of materials and production is still rising faster than companies can increase their prices, reducing their profits. The Fed is therefore more likely to make a smaller interest rate cut of 0.25% at its policy meeting in November, Reuters says.

"Despite elevated uncertainty, contacts were somewhat more optimistic about the longer-term outlook," the report noted, ahead of the 5 November presidential election.

British finance minister Rachel Reeves is set to unveil a transformative budget for the world’s sixth-largest economy next week, aimed at boosting public investment while carefully managing debt, reports Reuters.

As the Labour party's first budget in over a decade, it's expected to outline significant tax increases and spending measures to address critical infrastructure needs.

Reeves, a former Bank of England economist, has signalled caution about excessive borrowing, referencing past market turmoil under previous governments. “We need to invest more to grow our economy and seize the huge opportunities there are in digital, in tech, in life sciences, in clean energy,” she said on Thursday.

British consumer confidence dropped to its lowest level since March ahead of the new government's first budget, falling to -21 in October amid concerns over potential tax hikes, according to a GfK survey.

However, the country's economy is expected to "accelerate", with the IMF raising its 2024 growth forecast from 0.7% to 1.1%, the BBC reports. This would put the UK in the "middle of the pack" of leading global economies. Reeves welcomed the boost, noting there’s still "more work to do".

Bank of Japan Governor Kazuo Ueda noted growing optimism about the US economy but highlighted market instability, signalling mixed risks for Japan’s economy. He emphasized caution on future interest rate hikes due to uncertainty around a US "soft landing" and volatile markets.

Eurozone bank lending rebounded in September, with company loans rising 1.1% and household lending up 0.7%, indicating gradual economic improvement. German business sentiment also exceeded expectations, though a rapid recovery remains unlikely, says Reuters.

The country's business activity contracted again in October but less than the previous month and showed signs of stabilizing. This improvement was driven by unexpected service sector growth despite continued strain on manufacturing. High energy costs and labour shortages remain key challenges.

Brazil plans to track its non-inflationary growth potential alongside gross domestic product to prove sustainable economic expansion is possible, the country's planning minister announced at this week's IMF-World Bank meetings. The IMF recently raised Brazil’s growth forecast for this year to 3.0%, marking the largest upward revision among major economies.

The Bank of Canada cut its key benchmark rate by 50 basis points to 3.75% on Wednesday, its first larger-than-usual move in over four years, reports Al Jazeera. This decision follows a decline in inflation to 1.6% in September, below the 2% target, after four consecutive rate cuts since June.

South Africa’s rand could strengthen further with continued government reforms and prudent fiscal policies, according to the governor of its central bank, Lesetja Kganyago. Recent Treasury initiatives have targeted energy, freight and telecommunications sectors to boost economic stability.

With a $700 billion funding gap to protect global biodiversity, a new World Economic Forum report seeks to guide businesses on nature finance. This article explores the innovative tools it highlights, like biodiversity credits, which are growing in popularity as potential solutions.

Women's health has long been overlooked and underfunded, with key areas like reproductive health and chronic diseases sidelined in research and policy. However, a recent report highlights a significant opportunity: prioritizing women's health could add £319 million ($417m) in GVA to the UK economy. Find out how this investment is not just about equity but a powerful economic strategy.

In 2024, three major climate conferences on biodiversity, climate, and land will align, offering businesses a unique opportunity to lead on critical climate issues. As we near the halfway mark of the "decade of action," meeting key goals like limiting global warming to 1.5°C is more urgent than ever. Despite economic pressures, these COPs present a chance for organizations to drive action, shape policy, and collaborate across sectors to tackle interconnected environmental challenges.