# IMF Upgrades Economic Forecasts for US and Japan; China Hits 5% Growth Target for 2024

- Link: https://www.thailand-business-news.com/economics/190658-imf-upgrades-economic-forecasts-for-us-and-japan-china-hits-5-growth-target-for-2024
- Published: 2025-01-28T10:13:00+07:00
- Author: Bahar Karaman

**The IMF forecasts economic growth for the US and Japan amid policy uncertainties.
China met its 5% growth target, while the US faces risks from inflation and Trump’s
policies.**

## The US economy is expected to gain short-term support from Trump’s policies

**Although Trump’s policies may stimulate short-term growth, they increase the risk
of a slowdown in the next period.** In December, headline inflation rose from 2.7%
in November to 2.9% YoY, while core inflation slightly eased from 3.3% to 3.2%. 
Meanwhile, Philadelphia Fed Manufacturing Index in January climbed to its highest
level since April 2021. Additionally, the IMF projects that the US economy will 
grow by 2.7% in 2025, higher than the previous forecast of 2.2%, though slowing 
from 2.8% in 2024.

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The US economy is expected to gain short-term support from Trump’s policies, such
as corporate tax cuts, deregulation, and support for the digital assets. However,
policies like deporting illegal immigrants and raising tariffs on trading partners,
especially China, may hinder US economic growth in the future. In addition to inflationary
pressures from rising production and labor costs, other high-risk factors remain,
such as

(i) a rise in corporate debt refinancing;

(ii) the highest number of bankruptcy filings in 14 years; and

(iii) increased delinquency rates, particularly in credit card and auto loans. Given
these factors, Krungsri Research expected the Fed Funds rate to be cut by an additional
75bps to a range of 3.50-3.75% by end-2025, aligning with the growing downside risks.

## Japan’s recovery remains fragile, hindered by weak manufacturing and exports amid the economic slowdown of its trading partners.

**Service sector and stimulus measures help boost Japan’s recovery, while rising
inflation and wages pave the way for rate hikes. **In 2024, international tourist
arrivals reached a record high of 36.87 million, up 47.1% YoY. Meanwhile, Tokyo 
inflation in December stood at 3% YoY, the highest in 14 months, while Tokyo Core
inflation reached 2.4%, the highest since August 2024. The IMF projects Japan’s 
economy to grow by 1.1% in 2025, following a contraction of -0.2% in 2024.

**The recovery remains fragile due to sluggish manufacturing** and exports amid 
a slowdown in trading partners’ economies, intensified competition in the automotive
industry, and trade war risks. However, Japan’s recovery continues to gain momentum,
as evidenced by improved business confidence and record-high tourist arrivals. This
recovery is further supported by rising wages and a JPY39 trn stimulus package designed
to reduce living costs and encourage investment. These factors would continue to
support economic growth. Consequently, Krungsri Research anticipates a higher probability
of the Bank of Japan (BOJ)’s rate hike at its January 23–24 meeting. However, the
unveiling of Trump’s policy details remains a crucial factor that could influence
the BOJ’s future decisions.

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## China’s 2024 economic growth reached the 5% official target

**China’s 2024 economic growth reached the 5% official target, driven mainly by 
stimulus measures and exports. **GDP accelerated to 5.4% YoY in 4Q24 from 4.6% in
3Q24, bringing the annual growth in line with the 5% target. Meanwhile, the decline
in average prices of new and secondhand homes across 70 cities began to slow in 
4Q24. However, consumption remained weak, growing just 3.7% YoY in December, close
to 3% in November. Similarly, fixed asset investment showed a subdued growth of 
just 3.2% in 202.

Despite exports remaining strong (+10.7% in December),** the potential escalation
of the trade war is likely to weaken the export performance**. Thus, the government
is expected to focus on boosting the domestic economy this year with targeted stimulus
measures that extend to additional products/industries, particularly trade-in subsidies
for household appliances, along with easing monetary policy. We expect these measures
to support a gradual recovery of consumption and investment in 1H25. However, risks
from the trade war and structural issues might slow China’s economic growth from
5% in 2024 to 4.8% in 2025.

## Thailand’s Business Investment Outlook Shows Promising Growth

**Investment shows positive signs from BOI promotion applications but still faces
challenges. Meanwhile, consumer confidence has improved but its momentum should 
be monitored after the end of stimulus measures.**

**Applications for BOI investment incentives reached a 10-year high of over THB 
1.1 trn in 2024, while other indicators suggest more challenges ahead.** The Board
of Investment (BOI) reported that the number of applications for investment promotion
reached a record high of 3,137 projects (+40% YoY) in 2024 and  its investment value
rose to the highest level since 2015 at THB 1,138.5 bn (+35%). Investment values
in the target industries were led by Digital (THB 243.3 bn), Electronics & electrical
appliances (THB 231.7 bn), Automotive & parts (THB 102.4 bn), Agriculture & food
processing (THB 87.6 bn), and Petrochemicals & chemicals (THB 49.1 bn). Foreign 
Direct Investment (FDI) accounted for 2,050 projects (+51% YoY) with total investments
worth THB 832.1 bn (+25%), led by investors from Singapore, China, Hong Kong, Taiwan,
and Japan.

The outlook of business investment shows more positive signs, as reflected by the
growth in both the number and investment value of BOI promotion applications. Additionally,
the issuance of investment promotion certificates, which is a step close to actual
investment, recorded 2,678 projects (+47% YoY) with total investments worth THB 
846.5 bn (+72%).

In addition, there are government’s policies supporting investment, including (i)
the Cabinet’s approval of the draft Entertainment Complex Business Act on January
13, and the criteria adjustment for the Long-Term Resident Visa to attract high-
potential foreign professionals to Thailand, and (ii) measures to alleviate the 
impact of the Global Minimum Tax, such as the BOI’s plan to allow promoted companies
to reduce corporate income tax by 50% of the normal rate for up to 10 years, as 
well as measures to enhance competitiveness. However, several challenges continue
to pressure the investment climate, such as (i) the Business Sentiment Index (BSI)
in December remaining below 50 (indicating contraction zone) for the 15th consecutive
month and a 1.7% contraction in the Manufacturing Production Index over the first
11 months of 2024, (ii) structural problem such as declining competitiveness, and(
iii) the rising trade tensions between the US and China.

**Consumer confidence gradually recovers on the back of short-term stimulus measures,
but growth of household income remains sluggish. **The Consumer Confidence Index(
CCI) in December increased for the third consecutive month, reaching a six-month
high of 57.9, up from 56.9 in November. This improvement was supported by a further
recovery in the tourism sector during the high season and  government’s stimulus
measures, which boosted spending among low-income groups. Meanwhile, spending among
middle-income groups slowed, as reflected in a contraction in durable goods purchases.

Although the CCI has improved, the sustainability of its recovery remains uncertain,
as the current index level is still relatively low compared to the pre-COVID average(
75.5 in 2019). The positive momentum has largely been driven by short-term stimulus
measures.

Early this year, additional measures included the Easy E-Receipt program and a THB
10,000 cash handout for eligible senior citizens are expected to provide temporary
support. However, consumption continues to face structural challenges, particularly
due to high household debt, despite a gradual decline in debt burden following the
debt relief program for vulnerable groups. According to the National Statistical
Office’s latest data (2021–2023), compiled by Krungsri Research, average liquid 
assets per household increased by just THB 8,238 per year, primarily due to an increase
in deposits and other financial assets rather than a rise in net income. 

Moreover, income growth has been slow and close to spending growth, reflecting weak
household consumption. In particular, households with earnings of less than THB 
30,000 per month (accounting for 67% share of total households) have been struggling
with their spending growth outpacing their income growth or their expense-to-income
ratio exceeding 100%.

As global economies navigate complex challenges, policy uncertainties loom large,
impacting investment decisions and overall economic stability. Countries are grappling
with issues like inflation, geopolitical tensions, and shifting trade dynamics. 
This environment of unpredictability is underscored by the International Monetary
Fund’s (IMF) latest economic forecasts, which indicate encouraging adjustments for
key economies such as the United States and Japan, suggesting a possible resilience
amidst the chaos.

In contrast to the intricacies observed in the US and Japanese markets, China’s 
achievement of its 5% economic growth target in 2024 highlights its relatively robust
economic strategy. The country continues to implement policies aimed at stimulating
domestic consumption and advancing technological innovation, positioning itself 
for sustained growth despite global headwinds. This achievement demonstrates China’s
commitment to maintaining stability and progress within its economy, even as uncertainties
affect other nations.

The divergence in economic performance among these major economies may reshape global
financial landscapes. As the US and Japan brace for potential outcomes stemming 
from policy shifts, China’s success provides a contrasting narrative, suggesting
that adaptable and proactive measures can yield positive results. This situation
emphasizes the critical importance of strategic policymaking in fostering resilience
and stability in an increasingly interconnected world.
[Read More](https://www.krungsri.com/en/research/macroeconomic/weekly/20250121)