The International Monetary Fund (IMF) anticipates steady global economic growth accompanied by ongoing disinflation, as detailed in its forthcoming World Economic Outlook scheduled for release on January 17, 2025.
IMF Managing Director Kristalina Georgieva noted that the US economy is performing “quite a bit better” than expected. However, she emphasised significant uncertainties surrounding the trade policies of the incoming administration of President-elect Donald Trump. These uncertainties are contributing to global economic headwinds and elevating long-term interest rates, Reuters reported.
Georgieva observed that, with inflation nearing the US Federal Reserve’s target and labour market data indicating stability, the Fed might consider pausing further interest rate cuts pending additional economic data. She projected that interest rates are likely to “stay somewhat higher for quite some time.”
The IMF’s October projections maintained the 2024 global growth forecast at 3.2% and slightly reduced the 2025 forecast by 0.1 percentage point, citing risks from potential trade conflicts and tight monetary policies. Georgieva highlighted the global interest in the US administration’s policy directions, particularly concerning tariffs, taxes, and deregulation, noting that such uncertainties influence long-term interest rates.
She also pointed out regional economic divergences:
– European Union: Growth is expected to stall.
– India: Anticipated to experience a slight economic weakening.
– Brazil: Facing higher inflation.
– China: Experiencing deflationary pressures and challenges with domestic demand.
Georgieva expressed concern for lower-income countries, stating that despite reform efforts, they remain vulnerable to new economic shocks. She emphasised the necessity for fiscal spending reductions and reforms to achieve sustainable growth, asserting, “Countries cannot borrow their way out. They can only grow out of this problem.”
