IMF predicts slightly slower global growth in 2024 and 2025

Global growth is projected to slow slightly to 3.2% this year, with the same rate anticipated for 2025, according to the IMF's announcement on Tuesday. The Fund cautioned that these steady figures conceal "significant" regional and sectoral changes.

IMF predicts slightly slower global growth in 2024 and 2025

In its latest World Economic Outlook (WEO) report, the International Monetary Fund forecasts that global inflation will continue to decline, reaching 5.8% this year and dropping to 4.3% by 2025. IMF chief economist Pierre-Olivier Gourinchas told AFP in an interview ahead of the report's release that "inflation is moving in the right direction without triggering a significant slowdown in economic growth or a global recession." He noted that in advanced economies, inflation is expected to return to central bank targets by 2025, though it may take "a bit longer" for emerging markets to catch up. The WEO report indicates that global growth is likely to trend towards a lackluster 3.1% by 2029, while also highlighting increasing risks to this outlook. Despite the relatively stable growth forecast through 2025, the IMF emphasized that "the picture is far from uniform," signaling "important sectoral and regional shifts" that have occurred in the last six months. The report identifies the U.S. as a key driver of global growth, contrasting sharply with the sluggish expansion in the euro area. The largest economy in the world is projected to grow by 2.8% this year, slightly down from 2.9% in 2023, yet still better than the IMF's previous estimate from July.

IMF's outlook

Looking ahead, growth is expected to ease to 2.2% in 2025—an increase of 0.3 percentage points from July—due to "gradual tightening" of fiscal policy and a cooling labor market that is likely to dampen consumption, according to the IMF. In Europe, growth is still increasing but remains low by historical standards, projected at a modest 0.8% this year, rising to 1.2% in 2025. While France and Spain saw improvements in their growth outlook for 2024, the IMF downgraded its projections for Germany by 0.2 percentage points this year and by half a percentage point next year, citing ongoing weaknesses in manufacturing. On a more positive note, growth in the UK is expected to pick up in both 2024 and 2025, driven by falling inflation and interest rates that stimulate domestic demand. Japan's growth is forecasted to decelerate sharply to just 0.3% this year, before accelerating to 1.1% next year, bolstered by private consumption as real wage growth strengthens, according to the IMF. The IMF anticipates that China's economic growth will continue to cool, declining from 5.2% last year to 4.8% this year, and further to 4.5% in 2025. "Despite ongoing weaknesses in the real estate sector and low consumer confidence, growth is expected to have only marginally slowed," the IMF noted, attributing this to "better-than-expected" net exports from the world's second-largest economy.