WASHINGTON (AP) — The International Monetary Fund on Tuesday upgraded its economic outlook for the United States this year, while lowering its expectations for growth in Europe and China. It left its forecast for global growth unchanged at a relatively lackluster 3.2% for 2024.

The IMF expects the U.S. economy — the world’s largest — to expand 2.8% this year, down slightly from 2.9% in 2023 but an improvement on the 2.6% it had forecast for 2024 back in July. Growth in the United States has been led by strong consumer spending, fueled by healthy gains in inflation-adjusted wages.

Next year, though, the IMF expects the U.S. economy to decelerate to 2.2% growth. With a new presidential administration and Congress in place, the IMF envisions the nation’s job market losing some momentum in 2025 as the government begins seeking to curb huge budget deficits by slowing spending, raising taxes or some combination of both.

The IMF, a 190-nation lending organization, works to promote economic growth and financial stability and reduce global poverty. In its latest forecast, it expects China’s economic growth to slow from 5.2% last year to 4.8% this year and 4.5% in 2025. The world’s No. 2 economy has been hobbled by a collapse in its housing market and by weak consumer confidence — problems only partly offset by strong exports.

The 20 European countries that share the euro currency are collectively expected to eke out 0.8% growth this year, twice the 2023 expansion of 0.4% but a slight downgrade from the 0.9% the IMF had forecast three months ago for 2024. The German economy, hurt by a slump in manufacturing and real estate, isn’t expected to grow at all this year.

Worldwide inflation has been cooling — from 6.7% in 2023 to a forecast 5.8% this year and 4.3% in 2025. It’s falling even faster in the world’s wealthy countries, from 4.6% last year to a forecast 2.6% this year and 2% — the target range for most major central banks — in 2025. The progress against inflation has allowed the Fed and the European Central Bank to finally reduce rates after they had aggressively raised them to combat the post-COVID-19 inflation surge.

“The battle against inflation is almost won,” IMF chief economist Pierre-Olivier Gourinchas told reporters Tuesday. ”In most countries, inflation is hovering close to central bank targets.”

But just as lower borrowing costs aid the world’s economies, the IMF warned, the need to contain enormous government deficits will likely put a brake on growth. The overall world economy is expected to grow 3.2% in both 2024 and 2025, down a tick from 3.3% last year. That’s an unimpressive standard: From 2000 through 2019, before the pandemic upended economic activity, global growth had averaged 3.8% a year.

The IMF also continues to express concern that geopolitical tension, including antagonism between the United States and China, could make world trade less efficient. The concern is that more countries would increasingly do business with their allies instead of seeking the lowest-priced or best-made foreign goods. Still, global trade, measured by volume, is expected to grow 3.1% this year and 3.4% in 2025, improving on 2023’s anemic 0.8% increase.

Gourinchas also said that economic growth could be lower if countries take steps to reduce immigration, which has helped reduce labor shortages in the United States and other advanced economies. And he said armed conflicts —such as those in Ukraine and the Middle East — could also threaten the economic outlook.

India’s economy is expected to 7% this year and 6.5% in 2025. While still strong, that pace would be down from 8.2% growth last year, a result of consumers slowing their spending after a post-pandemic boom.

The IMF predicts that Japan’s economy, hurt by production problems in the auto industry and a slowdown in tourism, will expand by a meager 0.3% this year before accelerating to 1.1% growth in 2025.

The United Kingdom is projected to register 1.1% growth this year, up from a dismal 0.3% in 2023, with falling interest rates helping spur stronger consumer spending.

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