The International Monetary Fund has slightly upgraded its global economic growth forecast but warned about progress on inflation on the back of conflicts in the Middle East and Europe.
Global growth 2024 is expected to rise by 3.2 per cent in the April world economic outlook, 0.1 percentage points higher than in the previous update in January.
While low by historical standards, the global growth forecasts for 2024 has been revised up 0.3 percentage points since October 2023.
The International Monetary Fund has slightly upgraded its global economic growth forecast. (Dean Lewins/AAP PHOTOS)
"Most indicators continue to point to a soft landing", with global growth steady and "inflation slowing almost as quickly as it rose", IMF chief economist Pierre-Olivier Gourinchas said.
Yet he highlighted stalled progress towards inflation targets as a risk factor as stubbornly high services inflation, the possibility of further trade restrictions on Chinese exports, and rising oil prices provide reasons to remain vigilant.
The possibility of the conflict between Israel and Hamas in Gaza spreading into the wider region is a risk to further commodity price spikes, along with attacks in the Red Sea and the ongoing war in Ukraine.
"Bringing inflation back to target should remain the priority," Mr Gourinchas said.
"While inflation trends are encouraging, we are not there yet."
Other downside risks to the outlook include China's troubled property sector, which could lead to ongoing economic weakness and pain for trading partners such as Australia.
The IMF expects the Chinese economy to slow from 5.2 per cent in 2023 to 4.6 per cent in 2024 and 4.1 per cent in 2025.
The IMF expects the Chinese economy to slow from 5.2 per cent in 2023 to 4.6 per cent in 2024. (Flavio Brancaleone/AAP PHOTOS)
Yet the financial institution views the risks to the global outlook as "broadly balanced", with upside possibilities including inflation falling faster than expected as jobs market participation keeps growing, allowing central banks to start cutting interest rates sooner.
Economic predictions for Australia are little changed from the previous update, with the IMF forecasting a 1.5 per cent rise in GDP in 2024 and two per cent in 2025.
In January, the nation's economy is expected to expand 1.4 per cent in 2024 and 2.1 per cent in 2025.
The IMF forecasts inflation to be at 3.5 per cent in 2024 and back to three per cent - the top of the Reserve Bank of Australia's target range - by 2025.
The global economy faces a complex set of challenges, Treasurer Jim Chalmers says. (Lukas Coch/AAP PHOTOS)
Treasurer Jim Chalmers said challenges in China's property sector and the threat of escalation of conflicts in the Middle East and Europe remained key risks to the global economic outlook.
"The global economy faces a complex set of challenges, with high but moderating inflation, weaker global growth and global fragmentation and the net-zero transformation reshaping supply chains," he said in a statement.
Dr Chalmers is due to travel to Washington later this week for International Monetary Fund, World Bank and G20 finance minister spring meetings.
"These evolving global conditions make it an important time to engage with my counterparts and international institutions as we put the final touches on the May budget," he said.
The federal budget is due on May 14.