The latest forecasts from the International Monetary Fund (IMF) indicate that the global economy is set to maintain its growth momentum similar to that of 2023 throughout 2024-25, with a simultaneous gradual decrease in both global headline and core inflation. While there have been slight adjustments for major economies compared to the January 2024 WEO Update, the overall forecast for global growth has not seen significant changes.
Notably, the United States is expected to show further growth, while other economies may experience modest downward revisions. Despite this, global growth forecasts remain higher than those in the October 2023 WEO.
Meanwhile, the outlook for inflation remains in line with the October 2023 WEO, with advanced economies experiencing a downward revision, offset by an upward revision for emerging markets and developing economies. The forecasts suggest that the medium-term prospects for global output and trade growth are at their lowest levels in decades, indicating a slowdown in the convergence towards higher living standards for middle- and lower-income countries.
The projections for the global economy are based on various factors as follows:
Commodity prices: Fuel commodity prices are expected to decrease in 2024, with oil prices forecasted to fall by approximately 2.5%. Coal and natural gas prices are also projected to decline from their previous highs, with coal prices estimated to drop by 25.1% and natural gas prices by 32.6% in 2024.
Non-fuel commodity prices are expected to remain relatively stable, with base metal prices anticipated to decrease by 1.8%, primarily due to weakened industrial activity in Europe and China.
Food commodity prices are forecasted to decline by 2.2% in 2024, driven by expectations of ample global supplies for wheat and maize.
Monetary policy: With inflation expected to continue its downward trend and long-term inflation expectations staying stable, major central banks in advanced economies are predicted to commence reducing their policy rates in the latter half of 2024.
By the fourth quarter of 2024, the Federal Reserve, Bank of England, and European Central Bank are anticipated to lower their policy rates.
Japan, on the other hand, is expected to gradually increase its policy rates, reflecting confidence in achieving sustainable inflation convergence to target levels.
Fiscal policy: Governments in advanced economies are forecasted to implement fiscal tightening in 2024, with the United States and the euro area expected to see a rise in the structural fiscal-balance-to-GDP ratio.
In contrast, emerging markets and developing economies are projected to have a broadly neutral fiscal stance in 2024, with a slight tightening expected in 2025.
