Global growth, estimated at 3.2 percent in 2023, is projected to continue at the same pace in 2024 and 2025, said Pierre-Olivier Gourinchas’ IMF’s chief economist in a press briefing in Washington.

“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,” he said.

The projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8 percent, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth.

But Mr. Gourinchas noted: “Economic activity is showing surprising resilience with inflation returning to target. Despite significant central bank hikes aimed at restoring price stability, the global economy grew steadily, supported by favorable supply developments. Meanwhile, global headline inflation is expected to fall from an annual average of 6.8% in 2023 to 5.9% in 2024 and to 4.5% in 2025.”

“Risks to the outlook are balanced but are more tilted to the downside in the near-term. On the downside, new price spikes from geopolitical tensions, along with persistent core inflation could raise interest rate expectations and reduce asset prices. High interest rates could have greater cooling effects than expected, but on the upside, fiscal policy could turn out to be more expansionary than currently anticipated in the context of elections, although at the risk of a costly adjustment later. Furthermore, inflation could fall faster than expected, allowing central banks to advance easing plans. Also, advances in artificial intelligence and timely structural reforms have the potential to boost productivity.”

With inflationary pressures abating more swiftly than expected in many countries, risks to the inflation outlook are now also broadly balanced.

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