The International Monetary Fund (IMF) expects the global economy to reach a growth rate of 3.2% in 2024 and 2025, according to its latest World Economic Outlook report.
Advanced economies are predicted to grow 1.8% in both 2024 and 2025, an increase from the 1.7% growth experienced in 2023, IMF said. Meanwhile, emerging markets and developing economies are expected to grow by 4.2% in both 2024 and 2025, from 4.4% in 2023.
The firm, nonetheless, has made notable changes regarding specific countries’ predictions. The IMF has upgraded the forecast for the US to 2.8%, as a result of higher consumption and non-residential investments, and downgraded those of other advanced economies, including large European countries. European countries are expected to reach 0.8% growth in 2024, rising to 1.2% in 2025 on stronger domestic demand.
The IMF report predicted the Middle East and Central Asia economies will grow by 2.4% in 2024. The lowering of the forecast was attributed to oil production cuts. However, growth is expected to pick up next year, reaching 3.9% in 2025. Looking specifically at the UAE, the institution projected the country’s GDP will remain at 4% in 2024 and rise to 5.1% in 2025.
The IMF attributed the downgrade revisions for emerging economies to disruptions to the production and shipping of commodities—especially oil—conflicts geopolitical uncertainties and extreme weather events.
“The latest forecast for global growth five years from now––at 3.1%—remains mediocre compared with the pre-pandemic average,” said IMF Director of Research Pierre-Olivier Gourinchas, in the report’s foreword. “Persistent structural headwinds—such as population aging and weak productivity—are holding back potential growth in many economies.”
Global headline inflation is expected to fall from an annual average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies.
“As cyclical imbalances in the global economy wane, near-term policy priorities should be carefully calibrated to ensure a smooth landing.” the IMF wrote. “In many countries, shifting gears on fiscal policy is urgently needed to ensure that public debt is on a sustainable path and to rebuild fiscal buffers; the pace of adjustment should be tailored to country-specific circumstances.”
