The International Monetary Fund (IMF) has stated that global economic growth is expected to remain stable yet underwhelming. The IMF’s global economic growth projections for 2024 and 2025 remain at 3.2 percent, following 3.3 percent growth in 2023, despite a few countries having seen sizable downside growth revisions, in line with the expectations in the IMF’s April and July 2024 reports, according to the recent World Economic Outlook report published by the IMF. Although global inflation has declined, the IMF noted that downside risks, such as an escalation in regional conflicts, monetary policy remaining tight for too long, growth slowdown in China, and ongoing protectionist policies, are rising, dominating the outlook and advised countries to “brace for uncertain times”.
For advanced economies, growth is projected to be at 1.8 percent both for 2024 and 2025, compared to 1.7 percent for 2024 in the previous report. The upward revisions to the US economic growth forecast to 2.8 percent in 2024 and 2.2 percent in 2025, have offset downgrades to those for other advanced economies, in particular, the largest European countries. Meanwhile, for developing economies, growth is anticipated to decrease from 4.4 percent in 2023 to 4.2 percent in 2024 and 2025. According to the report, the disruptions to production and shipping, civil unrest and extreme weather events have led to downward revisions to the outlook for the Middle East and Central Asia. These have been compensated for by upgrades to the forecast for China and India, where surging demand for semiconductors and electronics has bolstered growth.
Regarding global inflation, the IMF noted in the report that easing cyclical imbalances have led to a better alignment of economic activity, resulting in inflation rates across countries coming closer together, contributing to lower global inflation. Global headline inflation is expected to fall from an annual average of 6.7 percent in 2023 to 5.8 percent in 2024 and 4.3 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies.