The International Monetary Fund (IMF) is set to project steady global growth and continued disinflation in its upcoming World Economic Outlook, according to a Reuters report citing IMF Managing Director Kristalina Georgieva.
Steady global growth
Speaking to reporters on Friday, Georgieva highlighted that the US economy is performing better than anticipated.
However, she acknowledged lingering uncertainty over the trade policies of President-elect Donald Trump‘s administration, which is contributing to global economic headwinds and driving up long-term interest rates.
Georgieva noted that the Federal Reserve could take its time before implementing further interest rate cuts as inflation is approaching its target and labor market data remains stable. Despite this, she emphasized that interest rates are expected to stay elevated for an extended period.
The IMF anticipates uneven growth patterns across regions. While growth is projected to slow in the European Union (EU) and weaken slightly in India, Brazil is likely to grapple with higher inflation.
Meanwhile, China is expected to face deflationary pressures and persistent challenges with domestic demand. Georgieva also warned that lower-income economies remain vulnerable to adverse shocks.
Georgieva pointed out that while higher interest rates were necessary to control inflation, they had not led to a global recession. However, she noted that inflation trends varied across regions, requiring central bankers to closely monitor local data.
She further highlighted that medium-term global growth prospects are at their weakest levels in decades.
Key background
In October, the IMF revised its 2024 growth forecasts upward for the US, Brazil, and the UK, but lowered them for China, Japan, and the Eurozone due to risks from potential trade wars, geopolitical conflicts, and tight monetary policies.
The Fund maintained its global growth forecast for 2024 at 3.2% as projected in July but trimmed its 2025 projection by 0.1%, bringing it to 3.2%. It also forecasted a decline in medium-term global growth to 3.1% over the next five years.
Projections for the MENA region in 2025 were revised down to 4% from 4.2%. In its October update, the IMF said global inflation is gradually easing, with headline inflation expected to drop to 5.8% in 2024 and 4.3% in 2025, down from 6.7% in 2023.
What to watch for
The IMF will release its updated global economic outlook on January 17.
