The International Monetary Fund expects global economic growth to stabilize and inflation to continue to decline when it issues its World Economic Outlook report on January 17, according to Fund Director Kristalina Georgieva.
Georgieva added, in statements to reporters yesterday, that the American economy is progressing “much better” than expected, despite the increasing uncertainty regarding the trade policies of the administration of President-elect Donald Trump, which increases the difficulties facing the global economy and pushes long-term interest rates to rise. .
She said that with inflation approaching the target set by the Federal Reserve (the US central bank) and data showing the stability of the labor market, the US central bank may wait for more data before making any cut in interest rates.
She added that interest rates in general are expected to remain “higher for a period of time.”
United Nations forecasts
This came hours after the United Nations released a report in which it expected global economic growth to stabilize at 2.8% during the current year, unchanged from the previous year.
The World Economic Situation and Prospects Report for 2025 issued by the United Nations last Thursday stated that this comes based on “positive but somewhat slower growth expectations for China and the United States,” supported by modest recovery in the European Union, Japan, and Britain and strong performance in some large developing economies, in particular India and Indonesia.
According to the report, “Despite continued growth, the global economy is expected to grow at a slower pace than the 2010-2019 (before the Corona pandemic) average of 3.2%.”
The report added, “This poor performance reflects continuing structural challenges such as weak investment, slow productivity growth, high levels of debt, and demographic pressures.”
The report expected growth in the United States to slow from 2.8% last year to 1.9% in 2025 with a weak labor market and a slowdown in consumer spending.
The report estimated growth in China at about 4.9% in 2024 and expected it to reach 4.8% this year in light of public sector investments and strong export performance, offset by weak consumer growth and continued weakness in the real estate sector.
The report added that Europe is expected to recover modestly, with growth increasing from 0.9% in 2024 to 1.3% in 2025, “supported by lower inflation and a strong labor market.”
The report suggested that major central banks will reduce interest rates further in 2025 as inflationary pressures decline. Global inflation is expected to decline from 4% in 2024 to 3.4% in 2025.
