IMF’s World Economic Outlook: Global Growth Steady at 3.2%, Inflation Risks Loom Large
The International Monetary Fund (IMF) has released its latest World Economic Outlook update for September 2024, maintaining its global growth forecast of 3.2% for 2024. However, the report highlights rising concerns about inflation, particularly due to persistent inflation in the services sector.
Key Highlights:
- Growth Forecasts Remain Unchanged: The global economy is projected to grow by 3.2% in 2024, consistent with earlier estimates. The forecast for 2025 sees a modest increase to 3.3%. However, advanced economies are expected to see more sluggish growth, particularly in the eurozone, which is forecasted to grow at a meager 0.9%.
- Inflation Concerns: Inflation, although expected to ease in 2024, will remain a challenge. Headline inflation is forecasted to drop from 6.7% in 2023 to 5.9% in 2024 and further to 4.4% by 2025. Advanced economies are predicted to face longer periods of elevated inflation compared to emerging markets, with inflationary pressures driven by rising oil and commodity prices.
- Monetary Policy Tightening: To combat these inflationary pressures, central banks are expected to maintain higher interest rates for an extended period, potentially dampening growth. Sticky inflation, particularly in services, could prolong the period of elevated rates.
- Regional Growth Variations: The report also notes the strong growth forecasts for emerging markets like India, which is expected to grow at 7%, while China’s growth is forecasted at 5% for 2024, driven by a rebound in private consumption.
The report stresses that global economic stability will depend on careful monetary policies and handling geopolitical tensions that could disrupt trade and increase inflation risks.
