Global Economy Mired in Low Growth Pattern: IMF — Evening Brief – 10.22.24
The International Monetary Fund (IMF) downwardly revised its global growth projection for 2025 and cautioned about escalating risks, including rising debt, global conflicts, and trade protectionism, while acknowledging central banks for controlling inflation without precipitating recessions.
The IMF’s World Economic Outlook report predicts a 3.2% expansion in global output, which is 0.1 percentage point lower than the projection provided in July. The forecast for this year remained constant at 3.2%.
The IMF has revised its projection for the euro area’s outlook next year to 1.2%, a decrease of 0.3% from July. The US projections for 2024 and 2025 were revised upward to 2.8% and 2.2%, respectively, reflecting increases of 0.2% and 0.3%.
The forecast for Mexico was slashed for both this year and the following year. The GDP outlook for China this year has been revised down to 4.8% from 5% due to weaknesses in the real estate industry and diminished consumer confidence, while the 2025 projection remains at 4.5%.
The IMF now projects that global inflation will fall to 4.3% next year, down from 5.8% in 2024, with both projections revised downward by 0.1% since July. The IMF simultaneously reduced its global import and export projections for advanced economies for 2024 and 2025 by 0.3% and 0.2%, respectively, while increasing predictions for developing markets.
“The risks are building up to the downside, and there is a growing uncertainty in the global economy,” chief economist Pierre-Olivier Gourinchas said in a briefing. “There is geopolitical risk, with the potential for escalation of regional conflicts,” that could affect commodity markets. There is a rise of protectionism, protectionist policies, disruptions in trade that could also affect global activity.”
The global expansion forecast follows the IMF’s recent warning regarding escalating global public debt, anticipated to surpass $100 trillion, or 93% of the world’s GDP, by year-end, as reported by Bloomberg. The increase is mostly propelled by the U. S. and China.
The IMF is calling on governments to implement stringent measures to stabilize borrowing. “Risks to the debt outlook are heavily tilted to the upside,” the IMF said.