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Risks to global growth are broadly balanced and a soft landing is possible
Global growth is projected to be 3.1% in 2024 and 3.2% in 2025, with better-than-expected resilience in the U.S. and several countries pushing the 2024 forecast to the October 2023 World Economic Outlook ( It is expected to be 0.2 percentage points higher than WEO). Large emerging market and developing economies, and financial support from China. However, the forecast for 2024-2025 is lower than the past (2000 This is lower than the average of 3.8% (from 2019 to 2019). growth. Amid easing supply-side issues and restrictive monetary policies, inflation rates are falling faster than expected in most regions. Global headline inflation is expected to fall to 5.8% in 2024 and 4.4% in 2025, with forecasts for 2025 revised downward.
Disinflation and stable growth reduce the likelihood of a hard landing, and risks to global growth are roughly balanced. On the positive side, financial conditions may ease further due to accelerating disinflation. Fiscal policy loosening more than necessary and expected in forecasts could temporarily lead to higher growth rates, but could create the risk that subsequent adjustments would be more costly. . If structural reforms gain momentum, productivity could improve due to positive cross-border spillover effects. On the downside, geopolitical shocks, including continued attacks in the Red Sea, could lead to higher prices for new products, disruptions in supply, or more persistent underlying inflation, potentially prolonging financial stress. Exacerbating real estate sector woes in China and elsewhere, and a disruptive pivot to tax increases and spending cuts, could also cause growth disappointment.
The short-term challenge for policymakers is to adjust monetary policy to underlying inflation trends, adjusting to a more accommodative stance when wage and price pressures have clearly dissipated. It is about managing the eventual decline of the inflation rate to the target. At the same time, in many cases, inflation has declined and economies have been better able to absorb the effects of fiscal tightening, rebuilding budgetary capacity to deal with future shocks and establishing new spending priorities. There is a renewed focus on fiscal consolidation in order to increase revenue for the ranking and limit the rise in price inflation. We need to reduce public debt. Targeted and carefully sequenced structural reforms will strengthen productivity growth and debt sustainability, accelerating convergence to higher income levels. More efficient multilateral coordination is needed, especially for debt resolution, not only to mitigate the effects of climate change, but also to avoid a debt crisis and create space for the necessary investments.
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