IMF projects steady, uneven global growth in 2025

The International Monetary Fund (IMF) has projected global growth to remain stable at 3.3 per cent in both 2025 and 2026, slightly below the historical average of 3.7 per cent seen between 2000 and 2019, according to the IMF’s World Economic Outlook Update January 2025, released on Saturday.

While the forecast for 2025 remains broadly unchanged from the October 2024 World Economic Outlook (WEO), the IMF warns of divergent risks across economies. The United States is expected to see robust growth, driven by strong consumption and labor markets, with a projected growth rate of 2.7 per cent in 2025. However, other major economies, particularly in Europe and Asia, face downward revisions due to weaker-than-expected momentum and elevated policy uncertainty. Global inflation is expected to decline to 4.2 per cent in 2025, with advanced economies likely to return to target levels sooner than emerging markets. The IMF emphasizes the need for careful policy balancing to manage risks, including potential disruptions to the disinflation process and fiscal sustainability concerns.

Middle East

In the Middle East and Central Asia, growth is expected to pick up in 2025, though at a slower pace than previously anticipated. The IMF has revised its growth forecast for Saudi Arabia downward by 1.3 percentage points to 3.3 per cent , largely due to extended OPEC+ production cuts. However, other countries in the region, particularly those in the Gulf Cooperation Council (GCC), are expected to benefit from higher oil prices and increased investment in non-oil sectors. Geopolitical tensions, including conflicts in the Middle East and Ukraine, remain a significant risk, potentially disrupting trade routes and driving up energy prices. The IMF calls for regional cooperation and structural reforms to enhance economic resilience and reduce dependence on volatile commodity markets.

Attribution: Amwal Al Ghad English

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