World Economic Outlook from Vajirao & Reddy Institute

WORLD ECONOMIC OUTLOOK

• The International Monetary Fund (IMF) has released its World Economic Outlook (WEO) for October, revealing that global growth is expected to stabilize at 3.2% in both 2024 and 2025.
• However, the medium-term forecast is less optimistic, predicting that economic slowdown will persist, with growth estimated at 3.1% through 2029.

• Current and Future Growth Projections
  • 2024 Growth: Expected to be 3.2%.
  • 2025 Growth: Projected to remain the same at 3.2%.
  • Medium-term Forecast: Growth is pegged at 3.1%, which is below the pre-pandemic average and reflects ongoing uncertainties.
• Income Inequality Concerns
• The forecast suggests that countries may see weaker growth in the next five years compared to the next year, which could widen the gap between rich and poor nations.
• When growth is low for a long time, job creation and wage growth slow down, increasing income inequality.

• Tight Monetary Policy: Central banks are raising interest rates to control high inflation, which might cause problems if done too long.
• Geopolitical Tensions: Global conflicts and increased trade barriers could hurt growth.
• Market Volatility: Ups and downs in financial markets may negatively impact government debt.
• China's Slowdown: A deeper economic downturn in China could lower global demand.
• Commodity Prices and Debt Stress: Rising commodity prices and debt issues in developing countries add more risks.
• Structural Challenges: Problems like an aging population and low productivity can limit growth.

• 2024 Growth Estimate: Revised upward to 2.8%, an increase of 0.2 percentage points from July, driven by stronger consumption and nonresidential investment.
• 2025 Growth Forecast: Anticipated to slow down to 2.2% due to fiscal tightening and a cooling labor market.

• Expected to reach 0.8% growth in 2024 and 1.2% in 2025, supported by stronger domestic demand after reaching its lowest point in 2023.

• Growth estimate revised downward by 0.6 percentage points to 0.3% for 2024 due to temporary supply disruptions in the auto industry, with an acceleration to 1.1% predicted for 2025.

• Growth is projected to accelerate to 1.1% in 2024 and 1.5% in 2025.

• Growth outlook remains stable at about 4.2% in the next two years, stabilizing at 3.9% by 2026.
• Emerging Asia's growth is expected to decline from 5.7% in 2023 to 5% in 2025, influenced by both India and China.

• GDP growth is projected to moderate from 8.2% in 2023 to 7% in 2024 and 6.5% in 2025.

• Despite ongoing weaknesses in the real estate sector and low consumer confidence, growth is projected to slow only marginally to 2.8% in 2024, with upward revisions of 0.2 percentage points for 2024 and 0.4 percentage points for 2025.

• Inflation Drivers: The rise in inflation has been linked to supply disruptions and high commodity prices from the Ukraine war.
• Current decreases in inflation are due to recovering supply chains and better labor availability.
• Projected Inflation Rates: Expected to fall from an average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025.

• After peaking at 9.4% in Q3 2022, headline inflation is projected to reach 3.5% by the end of 2025, which is below the average level of 3.6% from 2000 to 2019.

• Published by the International Monetary Fund (IMF).
• Released twice a year: in April and October.
• Accompanied by less comprehensive updates in July and January.
  • Provides estimates and forecasts for:
  • Global output growth
  • Inflation
  • Real Gross Domestic Product (GDP) growth
  • Consumer prices
  • Current account balances
  • Unemployment rates
• Covers 190 member countries, categorized by region and development status.
• Includes chapters on pressing economic issues.
• Data sourced from consultations with IMF member countries, included in the WEO database.