The International Monetary Fund (IMF) forecasts that global growth will hold steady at 3.3% for this year and next. This information comes from their World Economic Outlook report released on January 17, 2025. However, the report also highlights several uncertainties that could affect this outlook.
IMF Chief Economist Pierre-Olivier Gourinchas noted that inflation is expected to decrease to 4.2% this year and 3.5% next year, moving closer to central bank targets. He explained that the major economic disruptions caused by the pandemic and conflicts like the war in Ukraine are starting to fade.
Despite this optimistic view, challenges remain. Geopolitical conflicts, trade tensions, and impending elections in key nations contribute to a climate of uncertainty. Gourinchas pointed out that high trade policy uncertainty could lead to weak demand in several countries, including China, where growth is projected at 4.6% this year.
In light of these challenges, the report emphasizes the need for structural reforms and increased international cooperation. Gourinchas urged countries to focus on ambitious reforms that enhance resource allocation. He believes that boosting government revenues can spark innovation and competition, which are crucial for a resilient economy.
Furthermore, Gourinchas highlighted the importance of maintaining strong multilateral institutions. These bodies can help create a more sustainable global economy. He advised nations to manage their fiscal policies carefully and work towards reducing debt. This strategy will provide a safety net during future crises.
Gourinchas explained that lowering debt-to-GDP ratios will make countries better prepared for potential shocks, such as energy crises or disruptions in global trade. His message is clear: rebuilding fiscal buffers is an essential protective measure for the future.
For more in-depth insights, you can view the full report on the IMF’s website: https://www.imf.org/en/Publications/WEO.
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