18th January 2025 – (Washington) The International Monetary Fund (IMF) announced on Friday a slight increase in its global growth forecast for 2025, now projected at 3.3 per cent, a 0.1 percentage point rise from its previous estimate in October 2024. This update comes as part of the IMF’s latest World Economic Outlook (WEO).
IMF Chief Economist Pierre-Olivier Gourinchas highlighted the elevated levels of economic policy uncertainty, particularly in light of numerous new government elections in 2024. While the global growth outlook has remained largely unchanged since October, Gourinchas noted that “divergences across countries are widening.”
The U.S. economic growth forecast has seen a more substantial revision, increasing by 0.5 percentage points to 2.7 per cent. Conversely, the Eurozone’s outlook has been downgraded by 0.2 percentage points to 1 per cent. For emerging market economies, growth remains stable at 4.2 per cent, while China’s growth forecast for 2025 has been adjusted upward to 4.6 per cent, reflecting a similar 0.1 percentage point increase.
Gourinchas elaborated that these projections incorporate recent market developments and the effects of heightened trade policy uncertainty, which the IMF considers temporary. However, he refrained from making assumptions regarding potential policy changes currently under discussion.
Regarding the U.S. economy, Gourinchas remarked, “While many of the policy shifts under the incoming U.S. administration are hard to quantify precisely, they are likely to push inflation higher in the near term relative to our baseline.” He pointed out that proposed policies, such as looser fiscal measures or deregulation, could stimulate aggregate demand and elevate inflation levels.
Conversely, other measures, including higher tariffs or immigration restrictions, may function as negative supply shocks, diminishing output and exacerbating price pressures. Gourinchas also expressed concern that fiscal policy efforts in several countries have been either delayed or insufficient, emphasising the urgent need to restore fiscal sustainability to prepare for future economic shocks.
He concluded by calling for enhanced efforts to strengthen multilateral institutions, advocating for policies that promote a resilient and sustainable global economy. “Unilateral policies that distort competition—such as tariffs, nontariff barriers, or subsidies—rarely yield lasting domestic benefits and may worsen external imbalances, ultimately leaving all countries worse off,” Gourinchas stated.
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