IMF predicts slightly slower global growth in 2024 and 2025
IMF chief economist Pierre-Olivier Gourinchas said the US is “very close” to achieving a soft landing – a rare feat in monetary policy.
WASHINGTON – Global growth is expected to ease slightly to 3.2 per cent in 2024 and remain at that level in 2025, the International Monetary Fund (IMF) announced on Oct 22, while warning that the stable figures masked “important” regional and sectoral shifts.
In its new World Economic Outlook (WEO) report, the IMF also estimates that global inflation will continue to ease, hitting 5.8 per cent in 2024 before falling to 4.3 per cent in 2025.
“We are seeing inflation moving in the right direction without a major slowdown in economic growth or a global recession,” IMF chief economist Pierre-Olivier Gourinchas told AFP in an interview ahead of the report’s publication.
“In our baseline analysis, in advanced economies (inflation) will be back at central bank targets in 2025,” he continued, adding that it would take “a little bit longer” for emerging markets.
The fund’s WEO report noted that global growth is expected to trend to a lacklustre 3.1 per cent by 2029, and warned of growing risks to that metric.
Beneath the relatively calm outlook for growth through 2025, “the picture is far from monolithic”, the fund said, warning of “important sectoral and regional shifts” taking place over the past six months.
The WEO’s publication comes a day after the IMF and World Bank Annual Meetings got under way in Washington, bringing together finance ministers and central bankers from around the world for meetings on the health of the global economy.
Strong growth in US
The report finds that the United States has remained an engine of global growth – in sharp contrast with the euro area, where expansion remains slow.
The world’s largest economy is now expected to grow by 2.8 per cent in 2024, down ever so slightly from the 2.9 per cent seen in 2023 but still a shade better than the fund’s previous estimate in July.
It is then expected to ease somewhat to 2.2 per cent in 2025 – up 0.3 percentage points from July – as fiscal policy is “gradually tightened and a cooling labour market slows consumption”, the IMF said.
“The US economy has been doing very well,” Mr Gourinchas said, pointing to strong productivity growth and the positive effects of a surge in immigration on economic growth.
He added that the US is “very close” to achieving a soft landing – a rare feat in monetary policy where inflation falls to within targets without spurring a severe recession.
In Europe, growth is still trending higher but remains low by historical standards and is on track to be at an anaemic 0.8 per cent in 2024, rising slightly to 1.2 per cent in 2025.
While France and Spain saw upgrades in their outlook for 2024, the IMF cut its projections for Germany’s growth by 0.2 percentage points in 2024, and by half a percentage point in 2025, citing its “persistent weakness in manufacturing”.
There was some good news in Britain, where growth is projected to accelerate in both 2024 and 2025 “as falling inflation and interest rates stimulate domestic demand”.
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