Global economic growth forecast at 3.1% in 2024 & 3.2% in 2025: IMF

However, the forecast for 2024–25 remains below the historical average of 3.8 per cent (2000–19). Factors contributing to this include elevated central bank policy rates combating inflation, withdrawal of fiscal support amid high debt, and low underlying productivity growth.

Inflation is reportedly falling faster than expected in most regions, driven by unwinding supply-side issues and restrictive monetary policies. Global headline inflation is expected to decrease to 5.8 per cent in 2024 and further to 4.4 per cent in 2025, with the 2025 forecast revised downwards, as per IMF.

The IMF notes that the risk of a hard landing has receded, balancing the risks to global growth. Upside possibilities include faster disinflation leading to eased financial conditions, and stronger structural reform momentum boosting productivity with positive cross-border impacts. Downside risks encompass potential new commodity price spikes from geopolitical events, persistent underlying inflation, deepening property sector issues in China, and fiscal tightening impacts.

Policymakers face the challenge of managing the final descent of inflation to target, adjusting monetary policy in response to inflation dynamics. A renewed focus on fiscal consolidation is also suggested to rebuild budgetary capacity, raise revenue for new priorities, and curb public debt rise. Targeted structural reforms are recommended to enhance productivity growth and debt sustainability.

The outlook highlights positive developments in Asia, with revised upward growth for both 2023 and 2024. For 2023, growth is now estimated at 4.7 per cent, up from the previous 4.6 per cent projection. This upward revision is mainly due to growth in China, supported by higher spending on disaster reconstruction, and strong domestic demand in India.

The regional growth forecast for Asia in 2024 has also been upgraded to 4.5 per cent, from the earlier 4.2 per cent. Factors contributing to this include carry-over dynamics from 2023, a more supportive external environment, notably in the US, and a demand surge for technology products benefiting economies like Korea and Singapore. Additionally, countries like China and Thailand have announced significant policy stimulus, further bolstering the region's growth prospects.

Fibre2Fashion News Desk (DP)