## EXECUTIVE SUMMARY

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### Global growth outlook
- Global growth is expected to remain stable yet underwhelming.
- Growth projection: "3.2 percent in 2024 and 2025" — virtually unchanged from the July 2024 WEO Update and the April 2024 WEO.
- Notable forecast revisions beneath the surface:
  - Upgrades to the forecast for the United States.
  - Downgrades to forecasts for other advanced economies, in particular the largest European countries.
  - In emerging market and developing economies:
    - Downward revisions for the Middle East and Central Asia and for sub-Saharan Africa due to disruptions to production and shipping of commodities—especially oil—conflicts, civil unrest, and extreme weather events.
    - Upgrades for emerging Asia driven by surging demand for semiconductors and electronics, spurred by significant investments in artificial intelligence.
- Five-year outlook: "The latest forecast for global growth five years from now––at 3.1 percent" — remains mediocre compared with the prepandemic average.
- Structural headwinds cited: population aging and weak productivity holding back potential growth in many economies.

### Inflation and cyclical adjustment
- Cyclical imbalances have eased since the beginning of the year, improving alignment of economic activity with potential output in major economies.
- This adjustment is bringing inflation rates across countries closer together and on balance has contributed to lower global inflation.
- Global headline inflation projections:
  - "6.7 percent in 2023"
  - "5.8 percent in 2024"
  - "4.3 percent in 2025"
- Advanced economies are expected to return to their inflation targets sooner than emerging market and developing economies.
- Risks to disinflation process: goods prices have stabilized, but services price inflation remains elevated in many regions, underscoring the importance of understanding sectoral dynamics and calibrating monetary policy accordingly (see Chapter 2).

### Downside risks and vulnerabilities
- Risks to the global outlook are tilted to the downside amid elevated policy uncertainty.
- Specific risk scenarios and channels highlighted:
  - Sudden eruptions in financial market volatility (as experienced in early August) could tighten financial conditions and weigh on investment and growth, especially in developing economies with large near-term external financing needs that may trigger capital outflows and debt distress.
  - Further disruptions to the disinflation process, potentially from new spikes in commodity prices amid persistent geopolitical tensions, could prevent central banks from easing monetary policy, posing significant challenges to fiscal policy and financial stability.
  - Deeper- or longer-than-expected contraction in China’s property sector, especially if it leads to financial instability, could weaken consumer sentiment and generate negative global spillovers given China’s large footprint in global trade.
  - An intensification of protectionist policies would exacerbate trade tensions, reduce market efficiency, and further disrupt supply chains.
  - Rising social tensions could prompt social unrest, hurting consumer and investor confidence and potentially delaying the passage and implementation of necessary structural reforms.

### Policy priorities and recommendations
- As cyclical imbalances wane, near-term policy priorities should be carefully calibrated to ensure a smooth landing.
- Fiscal policy:
  - In many countries, shifting gears on fiscal policy is urgently needed to ensure that public debt is on a sustainable path and to rebuild fiscal buffers.
  - The pace of fiscal adjustment should be tailored to country-specific circumstances.
- Structural reforms:
  - Necessary to lift medium-term growth prospects.
  - Support for the most vulnerable should be maintained during reform implementation.
  - Chapter 3 discusses strategies to enhance the social acceptability of reforms, a crucial prerequisite for successful implementation.
- Multilateral cooperation:
  - Needed to accelerate the green transition and to support debt-restructuring efforts.
  - Mitigating the risks of geoeconomic fragmentation and strengthening rules-based multilateral frameworks are essential to ensure that all economies can reap the benefits of future growth.

*International Monetary Fund | October 2024*

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_Source: https://www.imf.org/-/media/files/publications/weo/2024/october/english/execsum.pdf_