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STORY: IMF / WORLD ECONOMIC OUTLOOK
TRT: 02:34
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGES: ENGLISH / NATS
DATELINE: 16 JANUARY 2025, WASHINGTON, DC / FILE
FILE - WASHINGTON, DC
1. Various shots, IMF Headquarters
16 JANUARY 2025, WASHINGTON, DC
2. Med shot, IMF Director of Research Department
3. SOUNDBITE (English) Pierre-Olivier Gourinchas, Director of Research Department, International Monetary Fund (IMF):
“Global growth is projected to hold steady at 3.3 percent this year and next, aligned with weakened potential growth since the pandemic. Inflation is steadily declining—reaching 4.2 percent this year and 3.5 percent next—bringing us closer to central bank targets. This is the end of a cycle, and the beginning of a new one. But divergences across countries are widening. The U.S. economy is exceeding expectations with stronger domestic demand, while Europe faces sluggish growth and persistently high energy prices. Emerging markets show resilience, with China set for a modest recovery.”
3. Med shot, Director of Research Department
4. SOUNDBITE (English) Pierre-Olivier Gourinchas, Director of Research Department, International Monetary Fund (IMF):
“Key risks include a sharper slowdown in Europe due to energy costs and public debt concerns, and in China, where insufficient policy support could trigger a stagnation trap. In the U.S., fiscal and trade policy shifts as well as possible curbs on immigration or a confidence boom fueled by expected deregulation could act in opposite directions to affect output but overall can stoke inflationary pressures, requiring tighter monetary policy. These dynamics could strain emerging markets through tighter financial conditions and a stronger US dollar.”
5. Med shot, Director of Research Department
6. SOUNDBITE (English) Pierre-Olivier Gourinchas, Director of Research Department, International Monetary Fund (IMF):
“Monetary policy must remain agile to address inflation risks while preventing expectations from de-anchoring. Fiscal policies need to be put on a more stable footing. This requires implementing credible consolidation efforts where needed. At the same time, structural reforms are key to protecting growth on this adjustment path and should be targeted at fostering innovation and competition. For emerging markets, flexible exchange rates and targeted fiscal and monetary responses are crucial. Stronger multilateral cooperation, especially in trade policy is essential for building a resilient global economy.”
FILE - WASHINGTON, DC
7. Various shots, IMF Headquarters
Global growth is stabilizing but remains below historical averages, the International Monetary Fund (IMF) is reporting in its latest forecast released today (17 Jan) in Washington, DC.
Inflation is moderating back towards central bank targets and growth holding steady at 3.3%, but there are mid-term risks and uncertainty the IMF said ahead of the release of the quarterly World Economic Outlook update.
“Global growth is projected to hold steady at 3.3 percent this year and next, aligned with weakened potential growth since the pandemic. Inflation is steadily declining—reaching 4.2 percent this year and 3.5 percent next—bringing us closer to central bank targets. This is the end of a cycle, and the beginning of a new one. But divergences across countries are widening. The U.S. economy is exceeding expectations with stronger domestic demand, while Europe faces sluggish growth and persistently high energy prices. Emerging markets show resilience, with China set for a modest recovery,” said IMF Chief Economist and Director of Research, Pierre-Olivier Gourinchas ahead of the report’s release.
That divergence means that different key economies such as China, Europe and the US are facing their own challenges to tackle.
“Key risks include a sharper slowdown in Europe due to energy costs and public debt concerns, and in China, where insufficient policy support could trigger a stagnation trap. In the U.S., fiscal and trade policy shifts as well as possible curbs on immigration or a confidence boom fueled by expected deregulation could act in opposite directions to affect output but overall can stoke inflationary pressures, requiring tighter monetary policy. These dynamics could strain emerging markets through tighter financial conditions and a stronger US dollar,” said Gourinchas.
But what can be done? The IMF had three main recommendations to policymakers.
“Monetary policy must remain agile to address inflation risks while preventing expectations from de-anchoring. Fiscal policies need to be put on a more stable footing. This requires implementing credible consolidation efforts where needed. At the same time, structural reforms are key to protecting growth on this adjustment path and should be targeted at fostering innovation and competition,” Gourinchas outlined.
And the IMF also had policy advice for emerging markets.
“For emerging markets, flexible exchange rates and targeted fiscal and monetary responses are crucial,” he said.
And with many countries adopting more protectionism in trade rules, the Fund is re-emphasizing the benefits to growth and well-being of cooperation in international commerce.
“Stronger multilateral cooperation, especially in trade policy is essential for building a resilient global economy,” Gourinchas noted.
