IMF Forecasts Continued Global Economic Growth

The International Monetary Fund (IMF) has projected ongoing global economic expansion and a decrease in inflation rates for the years 2024 and 2025. This forecast follows what the IMF describes as “surprisingly resilient” economic activity during the global disinflation period from 2022 to 2023.

In its latest World Economic Outlook projection, the IMF predicts a 3.2 percent global expansion for 2024, slightly higher than the 3.1 percent projected in January and consistent with the growth pace observed in 2023. Additionally, the IMF anticipates continued 3.2 percent growth for the third consecutive year in 2025.

The IMF attributes the moderate pace of expansion to various factors, including ongoing high borrowing costs, withdrawal of fiscal support, the lingering effects of the COVID-19 pandemic, and geopolitical tensions such as Russia’s invasion of Ukraine. It also cites weak productivity growth and increasing geoeconomic fragmentation as contributing factors.

Regarding Sub-Saharan Africa, the IMF forecasts an increase in growth from an estimated 3.4 percent in 2023 to 3.8 percent in 2024 and 4.0 percent in 2025. This projection accounts for the gradual improvement in supply issues and the diminishing negative impacts of earlier weather shocks. The forecast remains unchanged for 2024 from the January 2024 update, with upward revisions to Nigeria offsetting downward revisions to Angola. Emerging market and developing economies are expected to maintain stable growth through 2024 and 2025, albeit with regional disparities, according to the IMF.

Despite initial concerns about stagflation and recession, the IMF notes that the decline in global inflation since its mid-2022 peak has been accompanied by steady economic expansion. Factors contributing to this trend include increased government spending, strong household consumption, rising labour force participation, and households in major advanced economies tapping into savings accumulated during the pandemic.

The IMF predicts a decrease in global headline inflation from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and further to 4.5 percent in 2025. Advanced economies are expected to return to their inflation targets sooner than emerging market and developing economies. The drivers of declining core inflation include tight monetary policies, softening labour markets, and diminishing pass-through effects from earlier declines in relative prices, particularly in energy.

The IMF’s projections indicate cautious optimism regarding global economic performance and inflation dynamics in the coming years.