IMF predicts slightly slower global growth in 2024 and 2025

WASHINGTON: Global growth is expected to ease slightly to 3.2 percent this year and remain at that level in 2025, the IMF announced Tuesday, while warning that the stable figures masked “important” regional and sectoral shifts.

In its new World Economic Outlook (WEO) report, the International Monetary Fund also estimates that global inflation will continue to ease, hitting 5.8 percent this year, before falling to 4.3 percent in 2025.

The division is stark between advanced economies, where the IMF expects the inflation rate to fall to two percent next year, and emerging market and developing economies, where it expects inflation in 2025 to ease to 5.9 percent.

“The battle against inflation is almost won,” IMF chief economist Pierre-Olivier Gourinchas told reporters Tuesday. “The decline in inflation without a global recession is a major achievement.”

The Fund’s WEO report noted that global growth is expected to trend to a lackluster 3.1 percent 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 underway in Washington, bringing together finance ministers and central bankers from around the world for meetings on the health of the global economy.

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 percent this year, down ever-so-slightly from the 2.9 percent 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 percent in 2025 — up 0.3 percentage points from July — as fiscal policy is “gradually tightened and a cooling labor market slows consumption,” the IMF said.