IMF – World Economic Outlook, Jan 2024

According to the IMF's World Economic Outlook for January 2024, global growth is expected to reach 3.1 percent in 2024 and 3.2 percent in 2025. This forecast is slightly higher than the previous outlook in October 2023, thanks to the resilience of the United States and several emerging market economies, as well as fiscal support in China. However, the projected growth for 2024-2025 is still below the average of 3.8 percent seen between 2000 and 2019. This is due to factors such as high central bank policy rates to combat inflation, a withdrawal of fiscal support, and low productivity growth. Inflation is declining faster than anticipated in most regions due to the resolution of supply-side issues and the implementation of restrictive monetary policies. Global headline inflation is expected to drop to 5.8 percent in 2024 and 4.4 percent in 2025, with the forecast for 2025 being revised downwards. The risks to global growth are generally balanced, as disinflation and steady growth have reduced the likelihood of a severe economic downturn. There is potential for further easing of financial conditions if disinflation continues. However, excessive fiscal policy and a lack of structural reform could lead to temporary growth but result in more significant challenges in the future. Geopolitical shocks, supply disruptions, or persistent inflation could prolong tight monetary conditions and hinder growth. Issues in China's property sector or unexpected tax hikes and spending cuts could also negatively impact growth. Policymakers face the challenge of managing inflation and adjusting monetary policy accordingly. They should also focus on fiscal consolidation to prepare for future shocks while promoting productivity growth and debt sustainability. Multilateral coordination is essential for debt resolution, climate change mitigation, and necessary investments.