IMF forecasts 3.2% steady global economic growth for 2024, 2025

. Projects 3.3% GDP for Nigeria

By Clara Nwachukwu

The International Monetary Fund (IMF), yesterday, forecast a “steady” global economic growth of 3.2% for 2024 through to 2025.

Reiterating that inflation remains a risk, it also projects median headline inflation retreating from 2.8% at the end of 2024 to 2.4% by 2025 end.

“Most indicators continue to point to a soft landing,” it added.

These are contained in the IMF’s World Economic Outlook (WEO) April 2024, released on the sidelines of the ongoing 2024 Spring Meetings of the World Bank and IMF in Washington, United States.

The 2024 forecast was revised upward by 0.1 percentage point from the previous estimates in January, largely due to a significant upward revision in the U.S. outlook.

The WEO also sees Nigeria’s growth at 3.3% this year, but at a lower rate of 3.0% in 2025.

Although it retained 3.8% growth for the sub-Saharan Africa region in 2024, and 4.0% for 2025.

The Outlook said: “In sub-Saharan Africa, growth is projected to rise from an estimated 3.4% in 2023 to 3.8% in 2024 and 4.0% in 2025, as the negative effects of earlier weather shocks subside, and supply issues gradually improve.

“The forecast is unchanged for 2024 from the January 2024 WEO Update, as a downward revision to Angola owing to a contraction in the oil sector is broadly offset by an upward revision to Nigeria.”

…the projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8%, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth.

Global economy

For the global economy, the IMF Chief Economist, Pierre-Olivier Gourinchas, said: “The global economy continues to display remarkable resilience with growth holding steady and inflation declining, but many challenges still lie ahead.”

However, the WEO noted that “…the projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8%, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth.” 

It added that “Advanced economies are expected to see growth rise slightly, with the increase mainly reflecting a recovery in the euro area from low growth in 2023, whereas emerging market and developing economies are expected to experience stable growth through 2024 and 2025, with regional differences.”

Meanwhile, the IMF maintained that bringing inflation back to target should remain the priority for monetary policy managers.

It noted that “While inflation trends are encouraging, we are not there yet. Somewhat worryingly, progress toward inflation targets has somewhat stalled since the beginning of the year.”

“This could be a temporary setback, but there are reasons to remain vigilant. Most of the good news on inflation came from the decline in energy prices and in goods inflation.

“The latter has been helped by easing supply-chain frictions, as well as by the decline in Chinese export prices. But oil prices have been rising recently in part due to geopolitical tensions and services inflation remains stubbornly high.

“Further trade restrictions on Chinese exports could also push up goods inflation,” it said.

Green transition

Again, the IMF emphasized the need for major investments to boost green transition.

According to the Fund: “Cutting emissions is compatible with growth and activity has become much less emission-intensive in recent decades. But emissions are still rising. Much more needs to be done and done quickly.”

While green investment has expanded at a healthy pace in advanced economies and China, the trend is not so encouraging in the developing countries.

“The greatest effort must now be made by other emerging markets and developing economies, which must massively increase their green investment growth and reduce their fossil fuel investment.

This will require technology transfer by other advanced economies and China, as well as substantial private and public financing,” it said.

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