WASHINGTON, DC -- THE Washington-based International Monetary Fund (IMF) has forecasted a sustained global economic growth trajectory, buoyed by robust performances from major economies such as the United States and China.
This morning (Apr. 16), the IMF unveiled its World Economic Output report for 2024, anticipating a moderate uptick with a 0.3 percentage point increase to 3.2% in 2023. The projection indicates that this growth momentum is expected to persist through 2024 and 2025.
Pierre-Olivier Gugincha, Economic Counselor and Director of the Research Department, elaborated on the forecast during a press conference at the IMF Spring Meetings. He highlighted, "This represents a 0.3 percentage point upgrade from our October projections for 2024, with stronger activity than expected in the U.S., China, and other large emerging markets, but weaker activity in the euro area. Inflation continues to come down."
Gugincha also emphasized that median inflation is anticipated to decline from 4% at the end of last year to 2.8% by the end of this year and further to 2.4% by the end of 2025.
He pointed out the positive indicators suggesting a soft landing scenario for the global economy, attributing resilient growth and rapid disinflation to favorable supply developments, including diminishing energy price shocks and a notable rebound in labor supply, supported by robust immigration in several advanced economies.
However, Gugincha cautioned about potential challenges ahead, particularly for low-income developing countries still grappling with the aftermath of the pandemic and escalating cost-of-living pressures. He outlined the balanced risks, citing the possibility of new price spikes from geopolitical tensions or persistent core inflation acting as downsides, while faster disinflation or timely structural reforms were identified as potential upsides to support economic activity.
"Going forward, policymakers should prioritize measures that help preserve or even enhance the resilience of the global economy. A key priority is to rebuild fiscal buffers, especially in an environment with high real interest rates, modest growth, and elevated debts. Unfortunately, planned fiscal adjustments are often insufficient and could be derailed further given the record number of elections this year."
Despite encouraging inflation trends, Gugincha stressed the need for vigilance, noting a recent stalling in progress towards inflation targets in some countries. He attributed this partly to rising oil prices amid geopolitical tensions and lingering high services inflation in various nations.
