Global growth will be driven this year by a rebound in advanced economies that benefit from lower oil prices, while the economic situation will remain sluggish in the emerging market and developing economies, the International Monetary Fund said in a report on Tuesday.
In its twice-yearly World Economic Outlook, the IMF retained the world growth forecast for this year at 3.5 percent. The lender raised the growth forecast for next year to 3.8 percent from the 3.7 percent predicted in an interim report in January.
The Washington-based IMF acknowledged the growing divergence in growth prospects across the world, calling them 'uneven'. Growth is projected to strengthen in advanced economies this year relative to 2014 but weaken in emerging market and developing economies.
"A number of complex forces are shaping the prospects around the world," IMF Economic Counselor and Director of Research Olivier Blanchard said.
He added, "Legacies of both the financial and the euro area crises—weak banks and high levels of public, corporate, and household debt—are still weighing on spending and growth in some countries. Low growth in turn makes deleveraging a slow process."
Growth in the advanced economies was forecast to rise to 2.4 percent from 1.8 percent last year, unchanged from January. The growth rate was seen remaining unchanged in 2016.
However, the U.S. economic growth forecast for this year was lowered to 3.1 percent from 3.6 percent. The projection for next year was also lowered to 3.1 percent from 3.3 percent.
Domestic demand in the U.S. is expected to gain support from lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance, despite the projected gradual rise in interest rates and some drag on net exports from recent dollar appreciation, the IMF said.
The lender also euro area growth is showing 'signs of picking up,', supported by lower oil prices, low interest rates, and a weaker euro. The growth forecast for the Eurozone for this year was raised to 1.5 percent from 1.2 percent. The projection for next year was also upped to 1.6 percent from 1.4 percent.
Growth forecasts for the big four Eurozone economies - Germany, France, Italy and Spain - were also raised.
Outside of the euro area, the growth projection for U.K. for this year was retained at 2.7 percent, but the forecast for next year was cut to 2.3 percent.
Japan's growth forecasts were raised to 1 percent for this year and 1.2 percent for 2016. A weaker yen and lower oil prices are expected to lead growth.
The growth forecasts for emerging market and developing economies were also left unchanged. Growth was seen slowing to 4.3 percent this year from 4.6 percent in 2014. However, growth is expected to strengthen to 4.7 percent next year.
In this group, India was seen outpacing China with 7.5 percent growth both this year and next. India's growth projections were raised from 6.3 percent and 6.5 percent, respectively.
The Chinese economic growth forecasts were retained at 6.8 percent for this year and 6.3 percent for next year.
Meanwhile, Russia's economy was seen contracting more severely than forecast earlier. The projections were lowered to -3.8 percent and -1.1 percent.
Blanchard noted that a combination of population aging, lower investment, and sluggish advances in productivity will lead to significantly lower potential growth both in advanced and emerging market economies.
"More subdued growth prospects lead, in turn, to lower spending and lower growth today," he said. "Large movements in relative prices, whether exchange rates or the price of oil, creates winners and losers."
Risks to global growth are now more balanced relative to six months ago but remain tilted to the downside, the IMF said.
Macroeconomic risks such as recession and deflation in the euro area have slightly decreased, but financial and geopolitical risks have increased, the lender pointed out.
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May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.