Global growth is forecasted to slow slightly to 3.2% in 2024 and remain steady through 2025, according to the International Monetary Fund (IMF), though this stability conceals significant regional and sectoral changes. In its latest World Economic Outlook (WEO), the IMF also projects global inflation will continue to decline, reaching 5.8% this year and 4.3% by 2025.
Pierre-Olivier Gourinchas, the IMF’s chief economist, emphasized that inflation is heading in the right direction without triggering a severe economic slowdown or global recession. He added that inflation in advanced economies is expected to return to central bank targets by 2025, though emerging markets may take longer to achieve the same goal.
The WEO report also noted that global growth may decelerate to a modest 3.1% by 2029 and flagged potential risks to this forecast. While growth appears stable through 2025, the IMF warned of considerable changes across different sectors and regions.
The report was released during the IMF and World Bank Annual Meetings in Washington, which gathered global financial leaders to discuss the state of the world economy.
US growth remains strong The United States continues to drive global growth, contrasting sharply with the sluggish expansion in the eurozone. The US economy is expected to grow by 2.8% in 2024, slightly down from 2.9% in 2023 but still higher than the IMF’s July estimate. Growth is predicted to ease to 2.2% in 2025 as fiscal policies tighten and the labor market cools.
Gourinchas praised the resilience of the US economy, noting strong productivity gains and the positive impact of increased immigration. He also mentioned that the US is nearing a “soft landing,” where inflation stabilizes without leading to a significant recession.
In contrast, growth in Europe remains weak by historical standards. The eurozone is expected to grow by just 0.8% in 2024, rising to 1.2% in 2025. Germany’s growth outlook has been revised down due to continued struggles in its manufacturing sector. However, the UK received a more optimistic forecast, with growth projected to accelerate as inflation and interest rates drop.
China and India slowing down In Asia, Japan’s growth is expected to slow to 0.3% this year before rebounding to 1.1% in 2025, driven by stronger real wage growth. China’s economic growth is forecasted to decelerate to 4.8% this year and further to 4.5% in 2025, despite challenges in the real estate sector and low consumer confidence. Meanwhile, India’s growth is expected to slow more noticeably, from 8.2% in 2023 to 7% this year, and to 6.5% by 2025 as post-pandemic demand fades.
Regional shifts The IMF expects growth in the Middle East and Central Asia to improve to 2.4% in 2024, then rise to 3.9% in 2025 as disruptions in oil and shipping ease. Sub-Saharan Africa is forecasted to maintain 3.6% growth this year, increasing to 4.2% by 2025 as weather-related shocks subside and supply issues improve.
