## 2023. The United States, where GDP had already exceeded its prepandemic path, eased policy more

## Source details

**Canonical URL:** [2023. The United States, where GDP had already exceeded its prepandemic path, eased policy more](https://www.imf.org/-/media/files/publications/weo/2024/update/january/english/text.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/weo/2024/update/january/english/text.pdf.md)
- [Structured JSON version](/-/media/files/publications/weo/2024/update/january/english/text.pdf.json)

---

### Fiscal stance and output gaps
- The United States eased policy more in 2023 than the euro area and other economies where the recovery was incomplete.
- In emerging market and developing economies, on average the fiscal stance in 2023 is estimated to have been neutral.
- Exceptions where fiscal policy eased in 2023 include Brazil and Russia.
- In low-income countries, liquidity squeezes and the elevated cost of interest payments—averaging 13 percent of general government revenues, about double the level 15 years ago—crowded out necessary investments and hampered recovery relative to prepandemic trends.
- In 2024, fiscal policy is expected to tighten in several advanced and emerging market and developing economies to rebuild budgetary room for maneuver and curb the rising path of debt; this shift is expected to slow growth in the near term.

### Forecast — Growth outlook
- Global growth:
  - Estimated at 3.1 percent in 2023.
  - Projected at 3.1 percent in 2024.
  - Projected at 3.2 percent in 2025.
  - The 2024 forecast is about 0.2 percentage point higher than in the October 2023 WEO, reflecting upgrades for China, the United States, and large emerging market and developing economies.
  - The projection for 2024 and 2025 is below the historical (2000–19) annual average of 3.8 percent.
- World trade growth:
  - Projected at 3.3 percent in 2024 and 3.6 percent in 2025.
  - Historical average growth rate is 4.9 percent.
  - Countries imposed about 3,200 new restrictions on trade in 2022 and about 3,000 in 2023, up from about 1,100 in 2019 (Global Trade Alert data).
- Policy and commodity assumptions:
  - Annual average oil prices are projected to fall by about 2.3 percent in 2024.
  - Nonfuel commodity prices are projected to fall by 0.9 percent in 2024.
  - IMF staff project policy rates to remain at current levels for the Federal Reserve, the European Central Bank, and the Bank of England until the second half of 2024, before gradually declining as inflation moves closer to targets.
  - The Bank of Japan is projected to maintain an overall accommodative stance.

### Advanced economies — projections and notes
- Aggregate: 1.6 percent in 2023 → 1.5 percent in 2024 → 1.8 percent in 2025.
- United States:
  - 2.5 percent in 2023 → 2.1 percent in 2024 → 1.7 percent in 2025.
  - For 2024, an upward revision of 0.6 percentage point since the October 2023 WEO largely reflects statistical carryover from stronger-than-expected 2023 growth.
  - Slowdown drivers: lagged effects of monetary policy tightening, gradual fiscal tightening, and a softening in labor markets.
- Euro area:
  - 0.5 percent in 2023 → 0.9 percent in 2024 → 1.7 percent in 2025.
  - Recovery driven by stronger household consumption as energy shock effects subside and inflation falls.
  - Growth revised down by 0.3 percentage point for 2024 relative to October 2023 WEO, largely due to carryover from weaker-than-expected 2023 outcome.
- Selected other advanced economies:
  - United Kingdom: 0.5 percent in 2023 → 0.6 percent in 2024 → 1.6 percent in 2025.
  - Japan: 1.9 percent in 2023 → 0.9 percent in 2024 → 0.8 percent in 2025.
  - Revisions and outlook reflect fading one-off factors, disinflation permitting easing in financial conditions, and limits to catch-up after statistical revisions.

### Emerging market and developing economies — projections and notes
- Aggregate: 4.1 percent in 2023 → 4.1 percent in 2024 → 4.2 percent in 2025.
- Emerging and developing Asia:
  - 5.4 percent in 2023 → 5.2 percent in 2024 → 4.8 percent in 2025.
  - China: projected 4.6 percent in 2024 and 4.1 percent in 2025; 2024 upgraded by 0.4 percentage point since October 2023 WEO.
  - India: projected 6.5 percent in both 2024 and 2025; upgrade from October of 0.2 percentage point for both years.
- Emerging and developing Europe:
  - 2.7 percent in 2023 → 2.8 percent in 2024 → 2.5 percent in 2025.
  - Russia: projected 2.6 percent in 2024 and 1.1 percent in 2025; 2024 upgraded by 1.5 percentage points since October 2023 WEO.
- Latin America and the Caribbean:
  - 2.5 percent in 2023 → 1.9 percent in 2024 → 2.5 percent in 2025.
  - 2024 forecast revised down by 0.4 percentage point versus October 2023 WEO, reflecting negative growth in Argentina amid a significant policy adjustment.
  - Brazil and Mexico: upgrades of 0.2 and 0.6 percentage point respectively for 2024, largely due to carryover from stronger-than-expected 2023 domestic demand.
- Middle East and Central Asia:
  - 2.0 percent in 2023 → 2.9 percent in 2024 → 4.2 percent in 2025.
  - Revisions mainly attributable to Saudi Arabia and reflect temporarily lower oil production in 2024 due to unilateral cuts and OPEC+ accord cuts; non-oil growth expected to remain robust.
- Sub-Saharan Africa:
  - 3.3 percent in 2023 → 3.8 percent in 2024 → 4.1 percent in 2025.
  - 2024 downward revision of 0.2 percentage point from October 2023 mainly reflects a weaker projection for South Africa due to increasing logistical constraints.

### Inflation outlook
- Global headline inflation (annual average):
  - Estimated 6.8 percent in 2023 → projected 5.8 percent in 2024 → projected 4.4 percent in 2025.
  - Global forecast unrevised for 2024 versus October 2023 projections; revised down by 0.2 percentage point for 2025.
- By group:
  - Advanced economies: inflation expected to fall by 2.0 percentage points in 2024 to 2.6 percent.
  - Emerging market and developing economies: inflation projected to decline by 0.3 percentage point to 8.1 percent in 2024.
  - Forecasts revised down for 2024 and 2025 for advanced economies; revised up for 2024 for emerging market and developing economies, mainly on account of Argentina.
- Drivers of disinflation: lower core inflation from still-tight monetary policies, softening in labor markets, and pass-through effects from earlier and ongoing declines in relative energy prices.
- Additional indicators:
  - About 80 percent of the world’s economies are expected to see lower annual average headline and core inflation in 2024.
  - Among economies with an inflation target, headline inflation is projected to be 0.6 percentage point above target for the median economy by the fourth quarter of 2024, down from an estimated gap of 1.7 percentage points at the end of 2023.
  - Most of these economies are expected to reach their targets (or target range midpoints) by 2025.

### Notable commodity and price movements
- The annual average oil price is estimated to have declined by about 16 percent in 2023.
- In October 2023, in the context of the conflict in Gaza and Israel, oil prices initially increased, followed by a retrenchment as concerns about a regional escalation of the conflict declined.
- IMF staff project oil prices to fall by about 2.3 percent in 2024 and nonfuel commodity prices to fall by 0.9 percent in 2024.

### Risks to the Outlook
- Overall assessment: With the likelihood of a hard landing receding as adverse supply shocks unwind, risks to the global outlook are broadly balanced.
- Upside risks:
  - Faster disinflation: Inflation could fall faster than expected due to stronger-than-expected pass-through from lower fuel prices, downward shifts in the ratio of vacancies to unemployed persons, compression of profit margins, and a decline in inflation expectations, enabling central banks to move forward with policy-easing plans and improving sentiment.
  - Slower-than-assumed withdrawal of fiscal support: Governments might withdraw fiscal support more slowly than assumed during 2024–25, implying higher-than-projected global growth in the near term, though risking later inflationary and debt-related costs.
  - Faster economic recovery in China: Additional property sector–related reforms or larger-than-expected fiscal support could boost consumer confidence, private demand, and cross-border growth spillovers.
  - Artificial intelligence and supply-side reforms: Over the medium term, artificial intelligence could boost productivity and incomes, with advanced economies likely to experience benefits sooner; for emerging market and developing economies, faster progress on supply-enhancing reforms could attract investment and speed convergence.
- Downside risks:
  - Commodity price spikes amid geopolitical and weather shocks: The conflict in Gaza and Israel could escalate, affecting a region that produces about 35 percent of the world’s oil exports and 14 percent of its gas exports. Continued attacks in the Red Sea (through which 11 percent of global trade flows) and the war in Ukraine risk fresh supply shocks, with spikes in food, energy, and transportation costs. Container shipping costs have already sharply increased. More extreme weather shocks, including floods and drought and the El Niño phenomenon, could cause food price spikes and jeopardize global disinflation.
  - Persistence of core inflation, requiring a tighter monetary policy stance: Slower-than-expected decline in core inflation due to persistent labor market tightness and renewed supply-chain tensions could raise interest rate expectations, lower asset prices, increase financial stability risks, tighten global financial conditions, trigger flight-to-safety capital flows, and strengthen the US dollar.
  - Faltering of growth in China: Without a comprehensive restructuring policy package for the troubled property sector, real estate investment could drop more than expected, with negative implications for domestic growth and trading partners; unintended fiscal tightening and reduced household consumption are possible.
  - Disruptive turn to fiscal consolidation: Excessively sharp fiscal consolidation beyond envisaged plans could slow growth in the near term. Adverse market reactions could pressure countries lacking credible medium-term consolidation plans or at risk of debt distress. In low-income and emerging market economies, the risk of debt distress remains elevated, constraining growth-enhancing investments.

### Policy Priorities
- Central bank objective: As inflation declines toward target levels, the near-term priority is to deliver a smooth landing—neither lowering rates prematurely nor delaying lowering too much—and to differentiate policy according to country-specific inflation drivers.
- Managing the final descent of inflation:
  - Ensure wage and price pressures are clearly dissipating; avoid prematurely “declaring victory.”
  - Where underlying inflation and expectations move toward target-consistent levels, consider adjusting rates to more neutral levels while signaling continued commitment to price stability, accounting for long transmission lags.
  - In some emerging market economies, continue calibrating monetary adjustments based on a broad array of wage and price gauges.
  - Monitor financing conditions and be ready to deploy financial stability tools given still-high borrowing costs.
- Rebuilding fiscal buffers and debt sustainability:
  - Fiscal consolidation based on credible medium-term plans is warranted to restore room for budgetary maneuver; pace depends on country-specific circumstances.
  - Increase fiscal balances over a sustained period while protecting priority investments and support to the vulnerable.
  - Mobilize domestic revenue, address spending rigidities, and reinforce institutional fiscal frameworks.
  - For countries in or at high risk of debt distress, orderly debt restructuring may be necessary; enhance coordination through the Group of Twenty Common Framework and the Global Sovereign Debt Roundtable.
- Enabling durable medium-term growth:
  - Implement targeted and carefully sequenced structural reforms to reinforce productivity and reverse declining medium-term growth prospects.
  - Bundle reforms that alleviate the most binding constraints to front-load output gains and secure public buy-in.
  - Industrial policies can be pursued where externalities or market failures are established, but must be consistent with WTO rules and complemented by economy-wide reforms and good governance.
  - Use carbon pricing, subsidies for green investments, reductions in energy subsidies, and carbon border-adjustment mechanisms to speed the green transition, ensuring WTO consistency.
  - Invest in climate adaptation activities and infrastructure to support resilience.
- Strengthening resilience through multilateral cooperation:
  - Intensify cooperation on debt resolution, climate change mitigation, green energy transition, safeguarding transportation of critical minerals, restoring the WTO’s dispute-settlement ability, and responsible use of disruptive technologies such as artificial intelligence through upgraded domestic regulatory frameworks and harmonized global principles.
  - Follow up the IMF Board of Governors’ conclusion of the 16th Review of Quotas with members’ consent to respective quota increases.

### Box 1. GLOBAL FINANCIAL STABILITY UPDATE — key points
- Since October 2023, inflationary pressures have continued to recede, fueling expectations that monetary policy in advanced economies will ease in coming quarters; a momentous decline in interest rate expectations in December drove a broad-based rally in risky assets.
- Global financial conditions have loosened on net since October, driven by higher equity valuations, lower volatility, and already compressed corporate bond spreads.
- Global bond yields have fallen significantly on net since October, especially at longer maturities; for example, in the United States, 10-year real rates reversed to below 2 percent after rising to levels last seen before the global financial crisis. Yields have increased since the beginning of 2024 as investors pare back expectations on the magnitude and pace of monetary policy easing.
- Deterioration in credit quality: Bank credit growth has fallen as higher interest rates in 2023 weighed on loan demand and banks’ risk tolerance; defaults continue to mount for some borrower segments.
- Liquidity and market functioning: Central banks’ balance sheet reduction has been orderly, but lower liquidity is starting to weigh on market functioning, with US repo funding rates episodically spiking.
- Commercial real estate risks: Banking system exposure to commercial real estate remains a concern amid tepid demand and higher borrowing costs; a recent insolvency of a giant European property company highlights sector fragility.
- US bank vulnerabilities: US banks face sizable unrealized losses on available-for-sale and held-to-maturity securities; price-to-book ratios for US regional banks have not fully recovered since March 2023.
- Emerging market pressures: Correlation between emerging market assets and US Treasury yields has increased; higher yields in advanced economies led to outflows in emerging market assets, though local currency assets saw reversals since November. Financial conditions may continue to challenge weaker emerging markets and countries with rapidly narrowing yield differentials against the United States.

### Selected Economies Real GDP Growth (excerpted figures)
- Table notes: The selected economies account for approximately 83 percent of world output. Difference based on rounded figures for the current and October 2023 WEO forecasts. Data and forecasts for some economies are presented on a fiscal year basis.
- Select country projections and differences from October 2023 WEO Projections 1/ (Percent change):
  - Argentina: 2022 = 5.0; 2023 = –1.1; 2024 = –2.8; 2025 = 5.0; Difference 2024 = –5.6; Difference 2025 = 1.7
  - Australia: 2022 = 3.8; 2023 = 1.8; 2024 = 1.4; 2025 = 2.1; Difference 2024 = 0.2; Difference 2025 = 0.1
  - Brazil: 2022 = 3.0; 2023 = 3.1; 2024 = 1.7; 2025 = 1.9; Difference 2024 = 0.2; Difference 2025 = 0.0
  - Canada: 2022 = 3.8; 2023 = 1.1; 2024 = 1.4; 2025 = 2.3; Difference 2024 = –0.2; Difference 2025 = –0.1
  - China: 2022 = 3.0; 2023 = 5.2; 2024 = 4.6; 2025 = 4.1; Difference 2024 = 0.4; Difference 2025 = 0.0
  - Egypt 2/: 2022 = 6.7; 2023 = 3.8; 2024 = 3.0; 2025 = 4.7; Difference 2024 = –0.6; Difference 2025 = –0.3
  - France: 2022 = 2.5; 2023 = 0.8; 2024 = 1.0; 2025 = 1.7; Difference 2024 = –0.3; Difference 2025 = –0.1
  - Germany: 2022 = 1.8; 2023 = –0.3; 2024 = 0.5; 2025 = 1.6; Difference 2024 = –0.4; Difference 2025 = –0.4
  - India 2/: 2022 = 7.2; 2023 = 6.7; 2024 = 6.5; 2025 = 6.5; Difference 2024 = 0.2; Difference 2025 = 0.2
  - Indonesia: 2022 = 5.3; 2023 = 5.0; 2024 = 5.0; 2025 = 5.0; Difference 2024 = 0.0; Difference 2025 = 0.0
  - Iran 2/: 2022 = 3.8; 2023 = 5.4; 2024 = 3.7; 2025 = 3.2; Difference 2024 = 1.2; Difference 2025 = 1.2
  - Italy: 2022 = 3.7; 2023 = 0.7; 2024 = 0.7; 2025 = 1.1; Difference 2024 = 0.0; Difference 2025 = 0.1
  - Japan: 2022 = 1.0; 2023 = 1.9; 2024 = 0.9; 2025 = 0.8; Difference 2024 = –0.1; Difference 2025 = 0.2
  - Kazakhstan: 2022 = 3.3; 2023 = 4.8; 2024 = 3.1; 2025 = 5.7; Difference 2024 = –1.1; Difference 2025 = 1.1
  - Korea: 2022 = 2.6; 2023 = 1.4; 2024 = 2.3; 2025 = 2.3; Difference 2024 = 0.1; Difference 2025 = 0.0
  - Malaysia: 2022 = 8.7; 2023 = 4.0; 2024 = 4.3; 2025 = 4.4; Difference 2024 = 0.0; Difference 2025 = 0.0
  - Mexico: 2022 = 3.9; 2023 = 3.4; 2024 = 2.7; 2025 = 1.5; Difference 2024 = 0.6; Difference 2025 = 0.0
  - Netherlands: 2022 = 4.3; 2023 = 0.2; 2024 = 0.7; 2025 = 1.3; Difference 2024 = –0.4; Difference 2025 = –0.2
  - Nigeria: 2022 = 3.3; 2023 = 2.8; 2024 = 3.0; 2025 = 3.1; Difference 2024 = –0.1; Difference 2025 = 0.0
  - Pakistan 2/: 2022 = 6.2; 2023 = –0.2; 2024 = 2.0; 2025 = 3.5; Difference 2024 = –0.5; Difference 2025 = –0.1
  - Philippines: 2022 = 7.6; 2023 = 5.3; 2024 = 6.0; 2025 = 6.1; Difference 2024 = 0.1; Difference 2025 = 0.0
  - Poland: 2022 = 5.3; 2023 = 0.6; 2024 = 2.8; 2025 = 3.2; Difference 2024 = 0.5; Difference 2025 = –0.2
  - Russia: 2022 = –1.2; 2023 = 3.0; 2024 = 2.6; 2025 = 1.1; Difference 2024 = 1.5; Difference 2025 = 0.1
  - Saudi Arabia: 2022 = 8.7; 2023 = –1.1; 2024 = 2.7; 2025 = 5.5; Difference 2024 = –1.3; Difference 2025 = 1.3
  - South Africa: 2022 = 1.9; 2023 = 0.6; 2024 = 1.0; 2025 = 1.3; Difference 2024 = –0.8; Difference 2025 = –0.3
  - Spain: 2022 = 5.8; 2023 = 2.4; 2024 = 1.5; 2025 = 2.1; Difference 2024 = –0.2; Difference 2025 = 0.0
  - Thailand: 2022 = 2.6; 2023 = 2.5; 2024 = 4.4; 2025 = 2.0; Difference 2024 = 1.2; Difference 2025 = –1.1
  - Türkiye: 2022 = 5.5; 2023 = 4.0; 2024 = 3.1; 2025 = 3.2; Difference 2024 = 0.1; Difference 2025 = 0.0
  - United Kingdom: 2022 = 4.3; 2023 = 0.5; 2024 = 0.6; 2025 = 1.6; Difference 2024 = 0.0; Difference 2025 = –0.4
  - United States: 2022 = 1.9; 2023 = 2.5; 2024 = 2.1; 2025 = 1.7; Difference 2024 = 0.6; Difference 2025 = –0.1

### Other technical assumptions and notes (selected)
- Footnote on oil price assumptions: The average assumed price of oil in US dollars a barrel, based on futures markets (as of November 29, 2023), is $ 79.10 in 2024 and $ 75.31 in 2025.
- Inflation assumptions: The assumed inflation rate for the euro area is 2.8% in 2024 and 2.1% in 2025; for Japan is 2.7% in 2024 and 2.0% in 2025; and for the United States is 2.2% in 2024 and 1.9% in 2025.
- Regional grouping note: 5/ Indonesia, Malaysia, Philippines, Singapore, Thailand.
- Trade volume measure: 6/ Simple average of growth rates for export and import volumes (goods and services).
- Oil price basket: 7/ Simple average of prices of UK Brent, Dubai Fateh, and West Texas Intermediate crude oil.
- Exclusions: 8/ Excludes Venezuela.
- Quarter notation: Q4 over Q4 2/

*International Monetary Fund | World Economic Outlook Update, January 2024*

### 2023. The United States, where GDP had already exceeded its prepandemic path, eased policy more

### 2023. The United States, where GDP had already exceeded its prepandemic path, eased policy more

### Fiscal stance and output gaps
- The United States eased policy more in 2023 than the euro area and other economies where the recovery was incomplete.
- In emerging market and developing economies, on average the fiscal stance in 2023 is estimated to have been neutral.
- Exceptions where fiscal policy eased in 2023 include Brazil and Russia.
- In low-income countries, liquidity squeezes and the elevated cost of interest payments—averaging 13 percent of general government revenues, about double the level 15 years ago—crowded out necessary investments and hampered recovery relative to prepandemic trends.
- In 2024, fiscal policy is expected to tighten in several advanced and emerging market and developing economies to rebuild budgetary room for maneuver and curb the rising path of debt; this shift is expected to slow growth in the near term.

### Forecast — Growth outlook
- Global growth:
  - Estimated at 3.1 percent in 2023.
  - Projected at 3.1 percent in 2024.
  - Projected at 3.2 percent in 2025.
  - The 2024 forecast is about 0.2 percentage point higher than in the October 2023 WEO, reflecting upgrades for China, the United States, and large emerging market and developing economies.
  - The projection for 2024 and 2025 is below the historical (2000–19) annual average of 3.8 percent.
- World trade growth:
  - Projected at 3.3 percent in 2024 and 3.6 percent in 2025.
  - Historical average growth rate is 4.9 percent.
  - Countries imposed about 3,200 new restrictions on trade in 2022 and about 3,000 in 2023, up from about 1,100 in 2019 (Global Trade Alert data).
- Policy and commodity assumptions:
  - Annual average oil prices are projected to fall by about 2.3 percent in 2024.
  - Nonfuel commodity prices are projected to fall by 0.9 percent in 2024.
  - IMF staff project policy rates to remain at current levels for the Federal Reserve, the European Central Bank, and the Bank of England until the second half of 2024, before gradually declining as inflation moves closer to targets.
  - The Bank of Japan is projected to maintain an overall accommodative stance.

### Advanced economies — projections and notes
- Aggregate: 1.6 percent in 2023 → 1.5 percent in 2024 → 1.8 percent in 2025.
- United States:
  - 2.5 percent in 2023 → 2.1 percent in 2024 → 1.7 percent in 2025.
  - For 2024, an upward revision of 0.6 percentage point since the October 2023 WEO largely reflects statistical carryover from stronger-than-expected 2023 growth.
  - Slowdown drivers: lagged effects of monetary policy tightening, gradual fiscal tightening, and a softening in labor markets.
- Euro area:
  - 0.5 percent in 2023 → 0.9 percent in 2024 → 1.7 percent in 2025.
  - Recovery driven by stronger household consumption as energy shock effects subside and inflation falls.
  - Growth revised down by 0.3 percentage point for 2024 relative to October 2023 WEO, largely due to carryover from weaker-than-expected 2023 outcome.
- Selected other advanced economies:
  - United Kingdom: 0.5 percent in 2023 → 0.6 percent in 2024 → 1.6 percent in 2025.
  - Japan: 1.9 percent in 2023 → 0.9 percent in 2024 → 0.8 percent in 2025.
  - Revisions and outlook reflect fading one-off factors, disinflation permitting easing in financial conditions, and limits to catch-up after statistical revisions.

### Emerging market and developing economies — projections and notes
- Aggregate: 4.1 percent in 2023 → 4.1 percent in 2024 → 4.2 percent in 2025.
- Emerging and developing Asia:
  - 5.4 percent in 2023 → 5.2 percent in 2024 → 4.8 percent in 2025.
  - China: projected 4.6 percent in 2024 and 4.1 percent in 2025; 2024 upgraded by 0.4 percentage point since October 2023 WEO.
  - India: projected 6.5 percent in both 2024 and 2025; upgrade from October of 0.2 percentage point for both years.
- Emerging and developing Europe:
  - 2.7 percent in 2023 → 2.8 percent in 2024 → 2.5 percent in 2025.
  - Russia: projected 2.6 percent in 2024 and 1.1 percent in 2025; 2024 upgraded by 1.5 percentage points since October 2023 WEO.
- Latin America and the Caribbean:
  - 2.5 percent in 2023 → 1.9 percent in 2024 → 2.5 percent in 2025.
  - 2024 forecast revised down by 0.4 percentage point versus October 2023 WEO, reflecting negative growth in Argentina amid a significant policy adjustment.
  - Brazil and Mexico: upgrades of 0.2 and 0.6 percentage point respectively for 2024, largely due to carryover from stronger-than-expected 2023 domestic demand.
- Middle East and Central Asia:
  - 2.0 percent in 2023 → 2.9 percent in 2024 → 4.2 percent in 2025.
  - Revisions mainly attributable to Saudi Arabia and reflect temporarily lower oil production in 2024 due to unilateral cuts and OPEC+ accord cuts; non-oil growth expected to remain robust.
- Sub-Saharan Africa:
  - 3.3 percent in 2023 → 3.8 percent in 2024 → 4.1 percent in 2025.
  - 2024 downward revision of 0.2 percentage point from October 2023 mainly reflects a weaker projection for South Africa due to increasing logistical constraints.

### Inflation outlook
- Global headline inflation (annual average):
  - Estimated 6.8 percent in 2023 → projected 5.8 percent in 2024 → projected 4.4 percent in 2025.
  - Global forecast unrevised for 2024 versus October 2023 projections; revised down by 0.2 percentage point for 2025.
- By group:
  - Advanced economies: inflation expected to fall by 2.0 percentage points in 2024 to 2.6 percent.
  - Emerging market and developing economies: inflation projected to decline by 0.3 percentage point to 8.1 percent in 2024.
  - Forecasts revised down for 2024 and 2025 for advanced economies; revised up for 2024 for emerging market and developing economies, mainly on account of Argentina.
- Drivers of disinflation: lower core inflation from still-tight monetary policies, softening in labor markets, and pass-through effects from earlier and ongoing declines in relative energy prices.
- Additional indicators:
  - About 80 percent of the world’s economies are expected to see lower annual average headline and core inflation in 2024.
  - Among economies with an inflation target, headline inflation is projected to be 0.6 percentage point above target for the median economy by the fourth quarter of 2024, down from an estimated gap of 1.7 percentage points at the end of 2023.
  - Most of these economies are expected to reach their targets (or target range midpoints) by 2025.

### Notable commodity and price movements
- The annual average oil price is estimated to have declined by about 16 percent in 2023.
- In October 2023, in the context of the conflict in Gaza and Israel, oil prices initially increased, followed by a retrenchment as concerns about a regional escalation of the conflict declined.
- IMF staff project oil prices to fall by about 2.3 percent in 2024 and nonfuel commodity prices to fall by 0.9 percent in 2024.

*International Monetary Fund | World Economic Outlook Update, January 2024*

### 5.7 percent in 2024 and 6.8 percent in 2025 based o n calendar year.

### text - 5.7 percent in 2024 and 6.8 percent in 2025 based o n calendar year.

### Risks to the Outlook
- Overall assessment: With the likelihood of a hard landing receding as adverse supply shocks unwind, risks to the global outlook are broadly balanced.
- Upside risks:
  - Faster disinflation: Inflation could fall faster than expected due to stronger-than-expected pass-through from lower fuel prices, downward shifts in the ratio of vacancies to unemployed persons, compression of profit margins, and a decline in inflation expectations, enabling central banks to move forward with policy-easing plans and improving sentiment.
  - Slower-than-assumed withdrawal of fiscal support: Governments might withdraw fiscal support more slowly than assumed during 2024–25, implying higher-than-projected global growth in the near term, though risking later inflationary and debt-related costs.
  - Faster economic recovery in China: Additional property sector–related reforms or larger-than-expected fiscal support could boost consumer confidence, private demand, and cross-border growth spillovers.
  - Artificial intelligence and supply-side reforms: Over the medium term, artificial intelligence could boost productivity and incomes, with advanced economies likely to experience benefits sooner; for emerging market and developing economies, faster progress on supply-enhancing reforms could attract investment and speed convergence.
- Downside risks:
  - Commodity price spikes amid geopolitical and weather shocks: The conflict in Gaza and Israel could escalate, affecting a region that produces about 35 percent of the world’s oil exports and 14 percent of its gas exports. Continued attacks in the Red Sea (through which 11 percent of global trade flows) and the war in Ukraine risk fresh supply shocks, with spikes in food, energy, and transportation costs. Container shipping costs have already sharply increased. More extreme weather shocks, including floods and drought and the El Niño phenomenon, could cause food price spikes and jeopardize global disinflation.
  - Persistence of core inflation, requiring a tighter monetary policy stance: Slower-than-expected decline in core inflation due to persistent labor market tightness and renewed supply-chain tensions could raise interest rate expectations, lower asset prices, increase financial stability risks, tighten global financial conditions, trigger flight-to-safety capital flows, and strengthen the US dollar.
  - Faltering of growth in China: Without a comprehensive restructuring policy package for the troubled property sector, real estate investment could drop more than expected, with negative implications for domestic growth and trading partners; unintended fiscal tightening and reduced household consumption are possible.
  - Disruptive turn to fiscal consolidation: Excessively sharp fiscal consolidation beyond envisaged plans could slow growth in the near term. Adverse market reactions could pressure countries lacking credible medium-term consolidation plans or at risk of debt distress. In low-income and emerging market economies, the risk of debt distress remains elevated, constraining growth-enhancing investments.

### Policy Priorities
- Central bank objective: As inflation declines toward target levels, the near-term priority is to deliver a smooth landing—neither lowering rates prematurely nor delaying lowering too much—and to differentiate policy according to country-specific inflation drivers.
- Managing the final descent of inflation:
  - Ensure wage and price pressures are clearly dissipating; avoid prematurely “declaring victory.”
  - Where underlying inflation and expectations move toward target-consistent levels, consider adjusting rates to more neutral levels while signaling continued commitment to price stability, accounting for long transmission lags.
  - In some emerging market economies, continue calibrating monetary adjustments based on a broad array of wage and price gauges.
  - Monitor financing conditions and be ready to deploy financial stability tools given still-high borrowing costs.
- Rebuilding fiscal buffers and debt sustainability:
  - Fiscal consolidation based on credible medium-term plans is warranted to restore room for budgetary maneuver; pace depends on country-specific circumstances.
  - Increase fiscal balances over a sustained period while protecting priority investments and support to the vulnerable.
  - Mobilize domestic revenue, address spending rigidities, and reinforce institutional fiscal frameworks.
  - For countries in or at high risk of debt distress, orderly debt restructuring may be necessary; enhance coordination through the Group of Twenty Common Framework and the Global Sovereign Debt Roundtable.
- Enabling durable medium-term growth:
  - Implement targeted and carefully sequenced structural reforms to reinforce productivity and reverse declining medium-term growth prospects.
  - Bundle reforms that alleviate the most binding constraints to front-load output gains and secure public buy-in.
  - Industrial policies can be pursued where externalities or market failures are established, but must be consistent with WTO rules and complemented by economy-wide reforms and good governance.
  - Use carbon pricing, subsidies for green investments, reductions in energy subsidies, and carbon border-adjustment mechanisms to speed the green transition, ensuring WTO consistency.
  - Invest in climate adaptation activities and infrastructure to support resilience.
- Strengthening resilience through multilateral cooperation:
  - Intensify cooperation on debt resolution, climate change mitigation, green energy transition, safeguarding transportation of critical minerals, restoring the WTO’s dispute-settlement ability, and responsible use of disruptive technologies such as artificial intelligence through upgraded domestic regulatory frameworks and harmonized global principles.
  - Follow up the IMF Board of Governors’ conclusion of the 16th Review of Quotas with members’ consent to respective quota increases.

### Box 1. GLOBAL FINANCIAL STABILITY UPDATE — key points
- Since October 2023, inflationary pressures have continued to recede, fueling expectations that monetary policy in advanced economies will ease in coming quarters; a momentous decline in interest rate expectations in December drove a broad-based rally in risky assets.
- Global financial conditions have loosened on net since October, driven by higher equity valuations, lower volatility, and already compressed corporate bond spreads.
- Global bond yields have fallen significantly on net since October, especially at longer maturities; for example, in the United States, 10-year real rates reversed to below 2 percent after rising to levels last seen before the global financial crisis. Yields have increased since the beginning of 2024 as investors pare back expectations on the magnitude and pace of monetary policy easing.
- Deterioration in credit quality: Bank credit growth has fallen as higher interest rates in 2023 weighed on loan demand and banks’ risk tolerance; defaults continue to mount for some borrower segments.
- Liquidity and market functioning: Central banks’ balance sheet reduction has been orderly, but lower liquidity is starting to weigh on market functioning, with US repo funding rates episodically spiking.
- Commercial real estate risks: Banking system exposure to commercial real estate remains a concern amid tepid demand and higher borrowing costs; a recent insolvency of a giant European property company highlights sector fragility.
- US bank vulnerabilities: US banks face sizable unrealized losses on available-for-sale and held-to-maturity securities; price-to-book ratios for US regional banks have not fully recovered since March 2023.
- Emerging market pressures: Correlation between emerging market assets and US Treasury yields has increased; higher yields in advanced economies led to outflows in emerging market assets, though local currency assets saw reversals since November. Financial conditions may continue to challenge weaker emerging markets and countries with rapidly narrowing yield differentials against the United States.

### Selected Economies Real GDP Growth (excerpted figures)
- Table notes: The selected economies account for approximately 83 percent of world output. Difference based on rounded figures for the current and October 2023 WEO forecasts. Data and forecasts for some economies are presented on a fiscal year basis.
- Select country projections and differences from October 2023 WEO Projections 1/ (Percent change):
  - Argentina: 2022 = 5.0; 2023 = –1.1; 2024 = –2.8; 2025 = 5.0; Difference 2024 = –5.6; Difference 2025 = 1.7
  - Australia: 2022 = 3.8; 2023 = 1.8; 2024 = 1.4; 2025 = 2.1; Difference 2024 = 0.2; Difference 2025 = 0.1
  - Brazil: 2022 = 3.0; 2023 = 3.1; 2024 = 1.7; 2025 = 1.9; Difference 2024 = 0.2; Difference 2025 = 0.0
  - Canada: 2022 = 3.8; 2023 = 1.1; 2024 = 1.4; 2025 = 2.3; Difference 2024 = –0.2; Difference 2025 = –0.1
  - China: 2022 = 3.0; 2023 = 5.2; 2024 = 4.6; 2025 = 4.1; Difference 2024 = 0.4; Difference 2025 = 0.0
  - Egypt 2/: 2022 = 6.7; 2023 = 3.8; 2024 = 3.0; 2025 = 4.7; Difference 2024 = –0.6; Difference 2025 = –0.3
  - France: 2022 = 2.5; 2023 = 0.8; 2024 = 1.0; 2025 = 1.7; Difference 2024 = –0.3; Difference 2025 = –0.1
  - Germany: 2022 = 1.8; 2023 = –0.3; 2024 = 0.5; 2025 = 1.6; Difference 2024 = –0.4; Difference 2025 = –0.4
  - India 2/: 2022 = 7.2; 2023 = 6.7; 2024 = 6.5; 2025 = 6.5; Difference 2024 = 0.2; Difference 2025 = 0.2
  - Indonesia: 2022 = 5.3; 2023 = 5.0; 2024 = 5.0; 2025 = 5.0; Difference 2024 = 0.0; Difference 2025 = 0.0
  - Iran 2/: 2022 = 3.8; 2023 = 5.4; 2024 = 3.7; 2025 = 3.2; Difference 2024 = 1.2; Difference 2025 = 1.2
  - Italy: 2022 = 3.7; 2023 = 0.7; 2024 = 0.7; 2025 = 1.1; Difference 2024 = 0.0; Difference 2025 = 0.1
  - Japan: 2022 = 1.0; 2023 = 1.9; 2024 = 0.9; 2025 = 0.8; Difference 2024 = –0.1; Difference 2025 = 0.2
  - Kazakhstan: 2022 = 3.3; 2023 = 4.8; 2024 = 3.1; 2025 = 5.7; Difference 2024 = –1.1; Difference 2025 = 1.1
  - Korea: 2022 = 2.6; 2023 = 1.4; 2024 = 2.3; 2025 = 2.3; Difference 2024 = 0.1; Difference 2025 = 0.0
  - Malaysia: 2022 = 8.7; 2023 = 4.0; 2024 = 4.3; 2025 = 4.4; Difference 2024 = 0.0; Difference 2025 = 0.0
  - Mexico: 2022 = 3.9; 2023 = 3.4; 2024 = 2.7; 2025 = 1.5; Difference 2024 = 0.6; Difference 2025 = 0.0
  - Netherlands: 2022 = 4.3; 2023 = 0.2; 2024 = 0.7; 2025 = 1.3; Difference 2024 = –0.4; Difference 2025 = –0.2
  - Nigeria: 2022 = 3.3; 2023 = 2.8; 2024 = 3.0; 2025 = 3.1; Difference 2024 = –0.1; Difference 2025 = 0.0
  - Pakistan 2/: 2022 = 6.2; 2023 = –0.2; 2024 = 2.0; 2025 = 3.5; Difference 2024 = –0.5; Difference 2025 = –0.1
  - Philippines: 2022 = 7.6; 2023 = 5.3; 2024 = 6.0; 2025 = 6.1; Difference 2024 = 0.1; Difference 2025 = 0.0
  - Poland: 2022 = 5.3; 2023 = 0.6; 2024 = 2.8; 2025 = 3.2; Difference 2024 = 0.5; Difference 2025 = –0.2
  - Russia: 2022 = –1.2; 2023 = 3.0; 2024 = 2.6; 2025 = 1.1; Difference 2024 = 1.5; Difference 2025 = 0.1
  - Saudi Arabia: 2022 = 8.7; 2023 = –1.1; 2024 = 2.7; 2025 = 5.5; Difference 2024 = –1.3; Difference 2025 = 1.3
  - South Africa: 2022 = 1.9; 2023 = 0.6; 2024 = 1.0; 2025 = 1.3; Difference 2024 = –0.8; Difference 2025 = –0.3
  - Spain: 2022 = 5.8; 2023 = 2.4; 2024 = 1.5; 2025 = 2.1; Difference 2024 = –0.2; Difference 2025 = 0.0
  - Thailand: 2022 = 2.6; 2023 = 2.5; 2024 = 4.4; 2025 = 2.0; Difference 2024 = 1.2; Difference 2025 = –1.1
  - Türkiye: 2022 = 5.5; 2023 = 4.0; 2024 = 3.1; 2025 = 3.2; Difference 2024 = 0.1; Difference 2025 = 0.0
  - United Kingdom: 2022 = 4.3; 2023 = 0.5; 2024 = 0.6; 2025 = 1.6; Difference 2024 = 0.0; Difference 2025 = –0.4
  - United States: 2022 = 1.9; 2023 = 2.5; 2024 = 2.1; 2025 = 1.7; Difference 2024 = 0.6; Difference 2025 = –0.1

### Other technical assumptions and notes (selected)
- Footnote on oil price assumptions: The average assumed price of oil in US dollars a barrel, based on futures markets (as of November 29, 2023), is $ 79.10 in 2024 and $ 75.31 in 2025.
- Inflation assumptions: The assumed inflation rate for the euro area is 2.8% in 2024 and 2.1% in 2025; for Japan is 2.7% in 2024 and 2.0% in 2025; and for the United States is 2.2% in 2024 and 1.9% in 2025.
- Regional grouping note: 5/ Indonesia, Malaysia, Philippines, Singapore, Thailand.
- Trade volume measure: 6/ Simple average of growth rates for export and import volumes (goods and services).
- Oil price basket: 7/ Simple average of prices of UK Brent, Dubai Fateh, and West Texas Intermediate crude oil.
- Exclusions: 8/ Excludes Venezuela.
- Quarter notation: Q4 over Q4 2/

*Source: International Monetary Fund, World Economic Outlook, January 2024 Update.*

---


_Source: https://www.imf.org/-/media/files/publications/weo/2024/update/january/english/text.pdf_