IMF projects robust global growth, continued disinflation in 2025

The International Monetary Fund (IMF) has revised its global growth forecast for 2025 marginally upward to 3.3%, according to its latest World Economic Outlook (WEO) update for January 2025.

This projection remains below the historical average growth rate of 3.7% recorded between 2000 and 2019.

The slight adjustment reflects an improved outlook for the United States, which offset downward revisions for other major economies.

Despite the upward revision, the forecast underscores persistent economic challenges, including tighter financial conditions, geopolitical tensions and inflationary pressures.

Global headline inflation is projected to decline further, reaching 4.2% in 2025 and 3.5% in 2026.

“Global growth is projected at 3.3 percent both in 2025 and 2026, below the historical (2000–19) average of 3.7 percent. The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies. Global headline inflation is expected to decline to 4.2 percent in 2025 and to 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies”, the report said.

The IMF noted that advanced economies are likely to meet inflation targets sooner than emerging market and developing economies, signaling a divergence in economic recovery trajectories.

The report highlights the need for policymakers to maintain a balance between curbing inflation and supporting growth, as global economies navigate the post-pandemic landscape.

“Medium-term risks to the baseline are tilted to the downside, while the near-term outlook is characterized by divergent risks. Upside risks could lift already-robust growth in the United States in the short run, whereas risks in other countries are on the downside amid elevated policy uncertainty.”

“Policy-generated disruptions to the ongoing disinflation process could interrupt the pivot to easing monetary policy, with implications for fiscal sustainability and financial stability. Managing these risks requires a keen policy focus on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth prospects through stepped-up structural reforms as well as stronger multilateral rules and cooperation”, the outlook added.