The International Monetary Fund has lowered its global growth forecast for next year, warning of an acceleration of risks ranging from armed conflicts to protectionist measures in trade. In its updated World Economic Outlook, the international organization has cut its estimate of global GDP for 2025 by a tenth, placing it at 3.2 percent, compared to the forecast made in July. The projection for this year remains stable at 3.2 percent.
Regarding inflation, the IMF estimates a slowdown to 4.3 percent next year, in contrast to 5.8 percent in 2024. The organization has long been indicating that the global economy could expand at a mediocre pace in the medium term, which would not be enough to provide countries with the necessary resources to combat poverty and address climate change.
Pierre-Olivier Gourinchas, director of the IMF’s research department, emphasized that the fight against inflation is close to being won and that a global recession is not expected. He also mentioned that most countries are keeping inflation near the targets set by central banks. Regarding growth in the United States, it is expected to slow from 2.8 percent in 2024 to 2.2 percent in 2025, while other advanced economies will show signs of recovery in their economic cycles.
As for the current projections, performance in emerging Asia remains strong despite a slight downward revision. India is expected to grow by 7 percent this year and 6.5 percent in 2025, while China will grow by 4.8 percent and 4.5 percent. Brazil will record growth of 3 percent and 2.2 percent, respectively.
Regarding lower interest rates in major economies, they are expected to relieve pressure on emerging market economies. Gourinchas emphasized the importance of implementing sustained fiscal adjustment strategies when necessary. However, he warned that the biggest challenge will be in growth and in responding to reforms.
The economist mentioned that the application of industrial and trade policy measures can protect domestic workers and industries, but it is crucial to avoid potential long-term negative repercussions. He highlighted that it is essential for economic growth to come from ambitious internal reforms that drive innovation, increase human capital, and improve competitiveness and resources.
Finally, there is growing concern about increasing uncertainty, especially concerning geopolitical risks and financial market volatility. This disconnection could enhance the likelihood of shocks, making it crucial to manage risks properly to avoid negative impacts on the global economy.
