The International Monetary Fund (IMF) has projected a continuation of global economic growth and a decline in inflation rates for the years 2024 and 2025.
This projection comes on the heels of “surprisingly resilient” economic activity during the global disinflation of 2022 to 2023, the IMF says.
The IMF also upgraded Nigeria’s economic growth by 0.2 per cent to 3.5 percent in 2024. It however downgraded the growth for 2025 by -0.4 to 2.5 per cent.
In its latest World Economic Outlook projection, the fund now forecasts a 3.2 percent global expansion for 2024, slightly higher than the 3.1 per cent projected in January and in line with the pace of growth seen in 2023.
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It also announced a continuation of 3.2 percent growth for the third consecutive year in 2025.
“The forecast for 2024 is revised up by 0.1 percentage point from the January 2024 WEO Update, and by 0.3 percentage point from the October 2023 WEO.
“The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic and Russia’s invasion of Ukraine; weak growth in productivity; and increasing geoeconomic fragmentation,” it said.
The IMF said growth in Sub-Saharan Africa would rise from an estimated 3.4 per cent in 2023 to 3.8 per cent in 2024 and 4.0 percent 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,” it said.
The IMF projected that emerging market and developing economies are expected to experience stable growth through 2024 and 2025, with regional differences.
It also said despite initial concerns of stagflation and recession, the descent of global inflation from its mid-2022 peak has been accompanied by steady economic expansion. It listed factors such as increased government spending, robust household consumption, and a notable rise in labor force participation as boosting growth in employment and incomes worldwide.
According to the IMF, the unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households in major advanced economies to draw on substantial savings accumulated during the pandemic.
Declining inflation
It said global headline inflation is expected to fall from an annual average of 6.8 per cent in 2023 to 5.9 per cent in 2024 and 4.5 per cent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.
The IMF gave the drivers of declining core inflation to include the effects of still-tight monetary policies, a related softening in labour markets, and fading pass-through effects from earlier declines in relative prices, notably in that of energy.
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