The International Monetary Fund (IMF) announced that the global battle against inflation has been largely won, with minimal impact on economic growth. Inflation rates in wealthy nations are projected to drop from 4.6% last year to 2.6% this year, and to 2% by 2025, which aligns with central bank targets. Despite past aggressive interest rate hikes, the US economy continues to grow, supported by consumer spending and rising inflation-adjusted wages. The IMF noted a significant achievement in lowering inflation without triggering a global recession.
While the report upgraded US economic forecasts, it reduced growth projections for Europe and China, predicting only 0.8% growth for the Eurozone and slower recovery in China’s economy. Australia’s growth is expected to slow to 1.2% this year, with inflation stable at 3.3%. The IMF has maintained a modest 3.2% forecast for global growth for both 2024 and 2025. Concerns linger over geopolitical tensions and their potential to disrupt global trade, while domestic policies aiming to cut budgets could also affect growth. Global trade is anticipated to rebound slightly, with volumes expected to rise by 3.1% this year.