The International Monetary Fund (IMF) will project steady global growth and continued disinflation in its updated World Economic Outlook set to release on Jan. 17, IMF Managing Director Kristalina Georgieva said Friday.
Georgieva noted the U.S. economy was performing “quite a bit better” than expected but flagged uncertainty surrounding trade policies under the incoming administration of President-elect Donald Trump, which she said could act as headwinds for the global economy and drive long-term interest rates higher.
Georgieva highlighted that the U.S. Federal Reserve could afford to wait before further interest rate cuts as inflation nears its target and the labor market remains stable. “Overall, interest rates are expected to stay somewhat higher for quite some time,” she added, pointing to the IMF’s assessment that global growth trends differ by region.
The IMF, which raised its 2024 economic growth forecasts for the U.S., Brazil, and Britain in October while cutting projections for China, Japan, and the eurozone, maintains its cautious outlook. In October, the IMF left its 2024 global growth forecast at 3.2%, warning that medium-term growth could slow to 3.1% in five years, well below pre-pandemic levels.
Georgieva noted the strong interest in U.S. policy shifts, saying, “Not surprisingly, given the size and role of the U.S. economy, there is keen interest globally in the policy directions of the incoming administration, particularly on tariffs, taxes, deregulation, and government efficiency.” She added that uncertainty around trade policy was especially challenging for globally integrated economies and regions like Asia.
Highlighting regional trends, Georgieva said growth was expected to weaken in the European Union and India, while inflationary pressures were rising in Brazil. She noted that China was grappling with deflationary pressures and sluggish domestic demand, while lower-income countries remained vulnerable to new shocks despite reform efforts.
Georgieva acknowledged that higher global interest rates had not triggered a recession but urged vigilance, stating that central bankers must carefully monitor local inflation trends. She warned that a strong U.S. dollar could increase funding costs for emerging and low-income economies. “Countries cannot borrow their way out. They can only grow out of this problem,” she said, emphasizing the need for fiscal reforms to sustain long-term growth.
The IMF’s updated outlook, set for release days before Trump takes office, reflects the first indication of the fund’s evolving assessment for 2024 and beyond. However, Georgieva did not provide specific projections, leaving the global community to await further clarity in the coming days.
