The IMF sees a runway for a “soft landing” for global growth, Pierre-Olivier Grinchat, the fund's head of research, told the World Economic Forum in Johannesburg, South Africa, on Tuesday (30 January). The statement was made at the presentation of the Economic Outlook (WEO).
“The global economy continues to show remarkable resilience, with inflation steadily declining and growth sustained. This increases the possibility of a soft landing. However, the pace of expansion remains slow and risks remain.” Grinchas told reporters.
Global growth is projected to be 3.1% in 2024 and 3.2% in 2025, with better-than-expected resilience in the U.S. and several countries pushing the 2024 forecast to the October 2023 World Economic Outlook ( It is expected to be 0.2 percentage points higher than WEO). Large emerging market and developing economies, and financial support from China.
However, the forecast for 2024-2025 is lower than in the past (2000 This is lower than the average of 3.8% (from 2019 to 2019). growth.
Disinflation and stable growth reduce the likelihood of a hard landing, and risks to global growth are broadly balanced.
“At the beginning of 2023, downside risks to economic activity and upside risks to inflation prevailed. Perhaps the fact that inflation is so persistent that the fight against inflation could lead to a recession “We found that there was a lot of concern about this. And a year later, we are in a situation where growth is stabilizing and inflation is falling. So this is certainly a very good development,” said the fund's chief economist. said.
Inflation rates are falling faster than expected in most regions amid easing supply-side issues and restrictive monetary policies. Global headline inflation is expected to fall to 5.8% in 2024 and 4.4% in 2025, with forecasts for 2025 revised downward.
Grinchas noted that the central bank will be following a narrow path in its goal of controlling inflation while ensuring continued economic growth.
“Therefore, if central banks continue to tighten for too long, if economic activity slows, financial conditions tighten, or there is another supply shock, there is probably a potential However, there is also potential for an upturn in the global economy. Grinchas said inflation could continue to decline and recover towards the target. He said the central bank could ease more quickly.
Grinchas expressed optimism that major central banks are doing their job and are watching data to inform when they can start cutting interest rates. That could happen in late 2024, he said.
“When you put all this together, what we are seeing is that central banks are agreeing with the assessment that they will probably postpone easing until late 2024. And when that happens, the U.S. Federal Reserve , we expect the European Central Bank to postpone easing, with the likes of the Bank of England and the Bank of England potentially starting to ease,'' Grinchas added.
The team was presenting the IMF's forecasts, which are released four times a year, in Johannesburg. The fund expects sub-Saharan Africa's growth to pick up, despite lowering its forecasts for the region's large economies such as Nigeria and South Africa. Deputy Chief Economist Daniel Lee said promoting governance reforms in the region would boost investor confidence and boost growth.
“Addressing governance weaknesses therefore applies not only to the current South African situation, but to sub-Saharan Africa as a whole. There are a number of structural bottlenecks that could create an environment that attracts investment, including from wealthy developed countries that have the capital to bring investment to this potentially very dynamic region.” he said.
A copy of the full report is available at IMF.org/WEO.