Global growth, estimated at 3.2 per cent in 2023, is projected to continue at the same pace in 2024 and 2025, according to the International Monetary Fund’s (IMF) World Economic Outlook (WEO) April 2024.

The forecast for this year is revised up by 0.1 percentage point (pp) from the January 2024 WEO Update, and by 0.3 pp from the October 2023 WEO.

The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic and Russia’s invasion of Ukraine; weak growth in productivity; and increasing geoeconomic fragmentation.

Global headline inflation is expected to fall from an annual average of 6.8 per cent in 2023 to 5.9 per cent in 2024 and 4.5 per cent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies, the report said.

The latest forecast for global growth five years from now—at 3.1 per cent—is at its lowest in decades. The pace of convergence toward higher living standards for middle- and lower-income countries has slowed, implying a persistence in global economic disparities.

The relatively weak medium-term outlook reflects lower growth in gross domestic product (GDP) per person stemming, notably, from persistent structural frictions preventing capital and labour from moving to productive firms.

Risks to the global outlook are now broadly balanced. On the downside, new price spikes stemming from geopolitical tensions, including those from the war in Ukraine and the conflict in Gaza and Israel, could, along with persistent core inflation where labor markets are still tight, raise interest rate expectations and reduce asset prices, a UNCTAD release said citing the WEO report.

Amid high government debt in many economies, a disruptive turn to tax hikes and spending cuts could weaken activity, erode confidence, and sap support for reform and spending to reduce risks from climate change, the report added.

Fibre2Fashion News Desk (DS)

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