The International Monetary Fund (IMF) is set to project steady global growth and a continuation of disinflation in its upcoming World Economic Outlook report, scheduled for release on January 17, according to Managing Director Kristalina Georgieva.
Speaking to reporters, Georgieva noted that the US economy is performing better than anticipated. However, she highlighted uncertainties surrounding trade policies under President-elect Donald Trump, which could pose challenges for the global economy and drive long-term interest rates higher.
With US inflation nearing the Federal Reserve’s target and the labor market remaining stable, Georgieva suggested the Fed could delay further interest rate cuts while emphasizing that interest rates are likely to remain relatively high for an extended period.
The IMF’s updated outlook comes as concerns persist about potential trade wars, geopolitical conflicts, and tight monetary policies. In October, the IMF had adjusted its forecasts for various economies, raising growth estimates for the US, Brazil, and the UK, while lowering them for China, Japan, and the Eurozone. It maintained its 2024 global growth forecast at 3.2% but reduced its 2025 projection slightly to 3.1%.
Georgieva pointed to notable economic trends, including a potential slowdown in the European Union and a slight weakening in India. In Brazil, inflationary pressures are increasing, while China is grappling with deflation and sluggish domestic demand. Lower-income nations remain particularly vulnerable to external shocks despite reform efforts.
She also emphasized the unusual economic scenario where long-term interest rates are rising even as short-term rates decline, adding to global uncertainty. The strength of the US dollar poses a challenge for emerging and low-income economies by increasing borrowing costs.
While the global economy has so far avoided recession despite higher interest rates, Georgieva underscored the need for countries to balance fiscal consolidation with growth-boosting reforms, ensuring long-term resilience without compromising economic prospects.
