## 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies

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### Summary of the outlook
- Global growth: 3.3 percent in 2025 and 3.3 percent in 2026.
- Medium-term risks to the baseline: tilted to the downside; near-term risks: divergent across countries.
- Inflation: on a global disinflation path, but progress is stalling in some countries and elevated inflation persists in a few cases.
- Policy focus: balance trade-offs between inflation and real activity, rebuild buffers, and lift medium-term growth through stepped-up structural reforms and stronger multilateral rules and cooperation.

### Forces shaping the outlook
- Global GDP growth in Q3 2024: 0.1 percentage point below the October 2024 WEO prediction.
- China: growth at 4.7 percent year-over-year in Q3 2024; faster-than-expected net export growth only partly offset a faster-than-expected slowdown in consumption.
- India: growth slowed more than expected, led by a sharper-than-expected deceleration in industrial activity.
- Euro area: growth subdued; Germany lagging other euro area countries due to weakness in manufacturing and goods exports despite a pick-up in consumption.
- Japan: output contracted mildly owing to temporary supply disruptions.
- United States: expanded at 2.7 percent year-over-year in Q3 2024, powered by strong consumption.

### Inflation, labor markets, and monetary policy
- Global median of sequential core inflation: just slightly above 2 percent for the past few months.
- Nominal wage growth: showing signs of moderation; labor markets indicate continuing normalization.
- Core goods price inflation: has fallen back to or below trend.
- Services price inflation: remains above pre–COVID-19 averages in many economies, most notably the United States and the euro area.
- Central bank behavior: where inflation is sticky, central banks are moving more cautiously in the easing cycle; a few central banks are raising rates, creating divergence in monetary policy.
- Monetary policy rates of major central banks: expected to continue to decline, though at different paces.

### Financial conditions, commodity prices, and uncertainty
- Global financial conditions: remain largely accommodative, with differentiation across jurisdictions.
- Equities: rallied in advanced economies; equity valuations in emerging market and developing economies more subdued.
- US dollar: broad-based strengthening—driven primarily by expectations of new tariffs and higher interest rates in the United States—has kept financial conditions tighter in many emerging market and developing economies.
- Economic policy uncertainty: increased sharply, especially on trade and fiscal fronts; expectations of policy shifts under newly elected governments in 2024 have shaped market pricing.
- Geopolitical tensions and trade frictions: remain elevated.
- Energy commodity prices: expected to decline by 2.6 percent in 2025.
- Nonfuel commodity prices: expected to increase by 2.5 percent in 2025, driven by upward revisions to food and beverage prices due to bad weather affecting large producers.
- Recent gas price increases: reflect colder-than-expected weather, supply disruptions including the ongoing conflict in the Middle East, and outages in gas fields.

### Projections and key statistics
- Global growth: 3.3 percent in 2025 and 3.3 percent in 2026.
- Historical (2000–19) average global growth: 3.7 percent.
- United States: growth projected at 2.7 percent in 2025; this is 0.5 percentage point higher than the October forecast; growth expected to taper to potential in 2026.
- Euro area: growth expected at 1.0 percent in 2025 (a downward revision of 0.2 percentage point from October) and 1.4 percent in 2026.
- China: Q3 2024 growth at 4.7 percent year-over-year; 2025 growth marginally revised upward by 0.1 percentage point to 4.6 percent relative to the October projection.
- Global median of sequential core inflation: just slightly above 2 percent for the past few months.
- Title reference: 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.

### Global and regional growth projections and revisions
- World output: 3.3 (2025), 3.3 (2026).
- Advanced Economies: 1.9 (2025), 1.8 (2026).
- Emerging Market and Developing Economies: 4.2 (2025), 4.3 (2026).
- Notable country projections (real GDP growth, percent):
  - United States: 2.7 (2025), 2.1 (2026).
  - China: 4.6 (2025), 4.5 (2026).
  - India (FY basis shown in table; calendar-year note provided): 6.5 (2025), 6.5 (2026).
  - Euro Area: 1.0 (2025), 1.4 (2026).
  - Saudi Arabia: 3.3 (2025), 4.1 (2026); a 1.3 percentage point downward revision to 2025 growth is noted, mostly driven by the extension of OPEC+ production cuts.
  - Brazil: 2.2 (2025), 2.2 (2026).
- Regional highlights:
  - Middle East and Central Asia: growth picks up in 2025 but less than expected in October 2024.
  - Latin America and the Caribbean: overall growth accelerates slightly in 2025 to 2.5 percent.
  - Sub-Saharan Africa: growth expected to pick up in 2025.
  - Emerging and Developing Europe: growth forecast to slow in 2025.

### World trade, commodity prices, and inflation (key figures)
- World trade volume (goods and services): 3.2 (2025), 3.3 (2026); revisions for 2025 and 2026 are downward by –0.2 and –0.1 percentage points, respectively.
- Oil price assumption (futures as of Nov 20, 2024): $69.76 (2025), $67.96 (2026).
- World consumer prices: 4.2 (2025), 3.5 (2026).
- Advanced Economies inflation assumed:
  - Euro area: 2.1 percent (2025), 2.0 percent (2026).
  - Japan: 2.0 percent (2025), 2.0 percent (2026).
  - United States: 2.0 percent (2025), 2.1 percent (2026).
- World trade volume revisions: –0.2 (2025), –0.1 (2026) relative to October 2024 WEO projections.

### Risks to the outlook
- Medium-term balance of risks: tilted to the downside.
- Near-term risks:
  - Tilted to the upside in the United States.
  - Downside risks in most other economies amid elevated policy uncertainty and ongoing adjustments (energy in Europe, real estate in China).
- Specific risk channels:
  - Intensification of protectionist policies (new tariffs): could lower investment, reduce market efficiency, distort trade flows, disrupt supply chains, and depress growth to varying degrees across economies.
  - Looser fiscal policy in the United States (e.g., tax cuts): could boost near-term US activity with small positive spillovers globally but may require larger fiscal adjustment later, weakening US Treasuries’ role as a global safe asset and increasing global interest rates.
  - Confidence-boosting deregulation in the United States: could spur investment and near-term growth but risks dollar appreciation, capital outflows from EMDEs, higher risk premiums, and potential long-term boom-bust dynamics if risk-taking limits are rolled back.
  - Geopolitical tensions (conflicts in the Middle East and Ukraine): could renew spikes in commodity prices, worsen trade routes, and impart stagflationary pressures on commodity-importing countries.
- Inflation pass-through and tariff risks:
  - Magnitude of inflationary effect from tariffs: especially uncertain; pass-through to import prices can be high while pass-through to consumer prices is lower and uncertain.
  - Upside inflation risk from tariff hikes could be higher this time given: (1) the global economy coming out of a significant recent inflation surge; (2) inflation expectations in many advanced economies are farther above central bank targets than in 2017–21; and (3) cyclical positions of major economies are more conducive to higher inflation than in 2016.
- Monetary policy responses to renewed inflationary pressures: could lead to higher policy rates, intensifying monetary policy divergence and worsening fiscal, financial, and external risks; a stronger US dollar could further alter capital flows and global imbalances.

### Policy implications and recommended responses
- Near-term priorities: rein in short-term risks and rebuild buffers while advancing measures to lift medium-term growth prospects.
- Monetary policy guidance:
  - Ensure price stability while supporting activity and employment.
  - Maintain a restrictive stance where inflationary pressures are persistent and upside risks are rising until underlying inflation is clearly returning to target.
  - Adopt a less restrictive stance where activity is cooling fast and inflation is on track to durably return to target.
- Fiscal policy guidance:
  - Fiscal policy should consolidate to put public debt on a sustainable path and restore space for agile responses.
  - Consolidation should be sizable yet gradual, clearly communicated, and credible; adopt growth-friendly measures and mitigate impacts on poor individuals.
- Exchange rate and macro-financial measures (Integrated Policy Framework):
  - For countries with deep foreign exchange markets and low foreign-currency debt: adjust policy rates and allow exchange rate flexibility.
  - For countries with shallow foreign exchange markets and substantial foreign-currency debt: consider temporary FX interventions (with adequate reserves used prudently), capital flow management measures, macroprudential policies, or combinations alongside appropriately set monetary and fiscal policies to preserve macro-financial stability.
- Structural and multilateral priorities:
  - Pursue targeted reforms in labor markets, competition, health care, education, and digitalization to revive productivity growth and attract capital.
  - Active communication and engagement with stakeholders to design and implement reforms considering distributional impacts.
  - Multilateral cooperation to contain fragmentation, sustain growth and stability, and address global challenges.
  - Trade policy recommendations: ensure consistency with WTO legal frameworks, maintain clarity and transparency, restore a fully and well-functioning WTO dispute settlement system, level the playing field, and seek coherence for resilience within the rules-based multilateral trading system.

### Key tabulated figures (selected)
- World Output: 3.3 (2025), 3.3 (2026); difference from October 2024 WEO Projections: 0.1 (2025), 0.0 (2026).
- World Trade Volume (goods and services): 3.2 (2025), 3.3 (2026); difference from October 2024 WEO Projections: –0.2 (2025), –0.1 (2026).
- Oil price assumption (futures as of Nov 20, 2024): $69.76 (2025), $67.96 (2026).
- World Consumer Prices: 4.2 (2025), 3.5 (2026); difference from October 2024 WEO Projections: –0.1 (2025), –0.1 (2026).

*World Economic Outlook Update, January 2025 — International Monetary Fund | January 2025*

### 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and

### 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and

### Summary of the outlook
- Global growth is expected to remain stable but lackluster, with global growth at 3.3 percent in both 2025 and 2026.
- Medium-term risks to the baseline are tilted to the downside; near-term risks are divergent across countries.
- Inflation is on a global disinflation path, but progress is stalling in some countries and elevated inflation persists in a few cases.
- Policy focus needed on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth through stepped-up structural reforms and stronger multilateral rules and cooperation.

### Forces shaping the outlook
- Global GDP growth in Q3 2024 was 0.1 percentage point below the October 2024 WEO prediction.
- China: growth at 4.7 percent in year-over-year terms in Q3 2024, below expectations; faster-than-expected net export growth only partly offset a faster-than-expected slowdown in consumption.
- India: growth slowed more than expected, led by a sharper-than-expected deceleration in industrial activity.
- Euro area: growth continued to be subdued, with Germany lagging other euro area countries, reflecting weakness in manufacturing and goods exports despite a pick-up in consumption.
- Japan: output contracted mildly owing to temporary supply disruptions.
- United States: momentum remained robust, expanding at 2.7 percent in year-over-year terms in Q3 2024, powered by strong consumption.

### Inflation, labor markets, and monetary policy
- Global disinflation continues, with the global median of sequential core inflation just slightly above 2 percent for the past few months.
- Nominal wage growth is showing signs of moderation; labor markets indicate continuing normalization.
- Core goods price inflation has fallen back to or below trend; services price inflation remains above pre–COVID-19 averages in many economies, most notably the United States and the euro area.
- Where inflation is more sticky, central banks are moving more cautiously in the easing cycle; a few central banks are raising rates, creating divergence in monetary policy.
- Monetary policy rates of major central banks are expected to continue to decline, though at different paces.

### Financial conditions, commodity prices, and uncertainty
- Global financial conditions remain largely accommodative, with differentiation across jurisdictions.
- Equities in advanced economies have rallied; equity valuations in emerging market and developing economies have been more subdued.
- A broad-based strengthening of the US dollar—driven primarily by expectations of new tariffs and higher interest rates in the United States—has kept financial conditions tighter in many emerging market and developing economies.
- Economic policy uncertainty has increased sharply, especially on trade and fiscal fronts; expectations of policy shifts under newly elected governments in 2024 have shaped market pricing.
- Geopolitical tensions, including those in the Middle East, and global trade frictions remain elevated.
- Energy commodity prices are expected to decline by 2.6 percent in 2025.
- Nonfuel commodity prices are expected to increase by 2.5 percent in 2025, driven by upward revisions to food and beverage prices due to bad weather affecting large producers.
- Recent gas price increases reflect colder-than-expected weather, supply disruptions including the ongoing conflict in the Middle East, and outages in gas fields.

### Projections and key statistics
- Global growth: 3.3 percent in 2025 and 3.3 percent in 2026.
- Historical (2000–19) average global growth: 3.7 percent.
- United States: growth projected at 2.7 percent in 2025; this is 0.5 percentage point higher than the October forecast; growth expected to taper to potential in 2026.
- Euro area: growth expected at 1.0 percent in 2025 (a downward revision of 0.2 percentage point from October) and 1.4 percent in 2026.
- China: Q3 2024 growth at 4.7 percent year-over-year; 2025 growth marginally revised upward by 0.1 percentage point to 4.6 percent relative to the October projection.
- Global median of sequential core inflation: just slightly above 2 percent for the past few months.
- Title reference: 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.

### Policy implications and recommendations
- Manage downside and divergent near-term risks by balancing trade-offs between inflation control and supporting real activity.
- Rebuild fiscal and monetary buffers to enhance resilience against policy-generated disruptions that could interrupt disinflation and the pivot to easing monetary policy.
- Monitor exchange rate movements, labor market indicators, and activity closely where inflation is proving sticky.
- Step up structural reforms to lift medium-term growth prospects.
- Strengthen multilateral rules and cooperation to mitigate trade policy uncertainty and geopolitical spillovers.

*World Economic Outlook Update, January 2025 — International Monetary Fund | January 2025*

### 2.  Evolution of 2025 Growth Forecasts

### 2.  Evolution of 2025 Growth Forecasts

### Global and regional growth projections and revisions
- World output projected at 3.3 percent in 2025 and 3.3 percent in 2026.
- Advanced Economies projected at 1.9 percent in 2025 and 1.8 percent in 2026.
- Emerging Market and Developing Economies projected at 4.2 percent in 2025 and 4.3 percent in 2026.
- Notable country projections (real GDP growth, percent):
  - United States: 2.7 (2025), 2.1 (2026).
  - China: 4.6 (2025), 4.5 (2026).
  - India (FY basis shown in table; calendar-year note provided): 6.5 (2025), 6.5 (2026).
  - Euro Area: 1.0 (2025), 1.4 (2026).
  - Saudi Arabia: 3.3 (2025), 4.1 (2026); a 1.3 percentage point downward revision to 2025 growth is noted, mostly driven by the extension of OPEC+ production cuts.
  - Brazil: 2.2 (2025), 2.2 (2026).
- Regional highlights:
  - Middle East and Central Asia: growth picks up in 2025 but less than expected in October 2024.
  - Latin America and the Caribbean: overall growth accelerates slightly in 2025 to 2.5 percent.
  - Sub-Saharan Africa: growth expected to pick up in 2025.
  - Emerging and Developing Europe: growth forecast to slow in 2025.

### World trade, commodity prices, and inflation
- World trade volume (goods and services) projected growth: 3.2 percent in 2025 and 3.3 percent in 2026; revisions for 2025 and 2026 are downward by –0.2 and –0.1 percentage points, respectively.
- Commodity and price assumptions:
  - Oil: average assumed price based on futures markets (as of November 20, 2024) is $69.76 for 2025 and $67.96 for 2026; oil price projection revisions include –11.7 percent (2025) and –2.6 percent (2026) in the commodity prices line.
  - World consumer prices: 4.2 percent (2025) and 3.5 percent (2026).
  - Advanced Economies inflation assumed: 2.1 percent (2025) and 2.0 percent (2026) for the euro area; 2.0 percent (2025) and 2.0 percent (2026) for Japan; 2.0 percent (2025) and 2.1 percent (2026) for the United States.
- Trade policy uncertainty has contributed to a slight downward revision in world trade volume for 2025 and 2026; heightened uncertainty is expected to hurt investment disproportionately among trade-intensive firms, though some front-loading of trade flows may partially offset near-term impacts.

### Inflation, monetary policy, and exchange rate dynamics
- Progress on disinflation is expected to continue; deviations from October 2024 WEO forecasts are minimal.
- Headline inflation projected to continue descending toward central bank targets, but:
  - Inflation in the United States projected to be close to, but above, the 2 percent target in 2025.
  - Inflationary dynamics are expected to be more subdued in the euro area.
  - Low inflation projected to persist in China.
- The gap between anticipated policy rates in the United States and other countries is expected to widen.
- A stronger US dollar has been driven by widening interest rate differentials and escalated trade policy uncertainty, contributing to capital flow shifts and net outflows from many emerging markets.

### Risks to the outlook
- Overall medium-term balance of risks tilted to the downside; global growth projected to be lower than its 2025–26 average and five-year-ahead forecasts at about 3 percent.
- Near-term risks:
  - Tilted to the upside in the United States.
  - Downside risks in most other economies amid elevated policy uncertainty and ongoing adjustments (energy in Europe, real estate in China).
- Specific risk channels and potential impacts:
  - Intensification of protectionist policies (new tariffs) could lower investment, reduce market efficiency, distort trade flows, disrupt supply chains, and depress growth to varying degrees across economies.
  - Looser fiscal policy in the United States (e.g., tax cuts) could boost near-term US activity with small positive spillovers globally but may require larger fiscal adjustment later, weakening US Treasuries’ role as a global safe asset and increasing global interest rates.
  - Confidence-boosting deregulation in the United States could spur investment and near-term growth but risks dollar appreciation, capital outflows from EMDEs, higher risk premiums, and potential long-term boom-bust dynamics if risk-taking limits are rolled back.
  - Geopolitical tensions (conflicts in the Middle East and Ukraine) could renew spikes in commodity prices, worsen trade routes, and impart stagflationary pressures on commodity-importing countries.
- Inflation pass-through and tariff risks:
  - Magnitude of inflationary effect from tariffs is especially uncertain; pass-through to import prices can be high while pass-through to consumer prices is lower and uncertain.
  - Upside inflation risk from tariff hikes could be higher this time given: (1) the global economy coming out of a significant recent inflation surge; (2) inflation expectations in many advanced economies are farther above central bank targets than in 2017–21; and (3) cyclical positions of major economies are more conducive to higher inflation than in 2016.
- Monetary policy responses to renewed inflationary pressures could lead to higher policy rates, intensifying monetary policy divergence and worsening fiscal, financial, and external risks; a stronger US dollar could further alter capital flows and global imbalances.

### Policy priorities and recommended responses
- Near-term: rein in short-term risks and rebuild buffers while advancing measures to lift medium-term growth prospects.
- Monetary policy guidance:
  - Ensure price stability while supporting activity and employment.
  - Maintain a restrictive stance where inflationary pressures are persistent and upside risks are rising until underlying inflation is clearly returning to target.
  - Adopt a less restrictive stance where activity is cooling fast and inflation is on track to durably return to target.
- Fiscal policy guidance:
  - Fiscal policy should consolidate to put public debt on a sustainable path and restore space for agile responses.
  - Consolidation should be sizable yet gradual, clearly communicated, and credible; adopt growth-friendly measures and mitigate impacts on poor individuals.
- Exchange rate and macro-financial measures (Integrated Policy Framework):
  - For countries with deep foreign exchange markets and low foreign-currency debt: adjust policy rates and allow exchange rate flexibility.
  - For countries with shallow foreign exchange markets and substantial foreign-currency debt: consider temporary FX interventions (with adequate reserves used prudently), capital flow management measures, macroprudential policies, or combinations alongside appropriately set monetary and fiscal policies to preserve macro-financial stability.
- Structural and multilateral priorities:
  - Pursue targeted reforms in labor markets, competition, health care, education, and digitalization to revive productivity growth and attract capital.
  - Active communication and engagement with stakeholders to design and implement reforms considering distributional impacts.
  - Multilateral cooperation to contain fragmentation, sustain growth and stability, and address global challenges.
  - Trade policy recommendations: ensure consistency with WTO legal frameworks, maintain clarity and transparency, restore a fully and well-functioning WTO dispute settlement system, level the playing field, and seek coherence for resilience within the rules-based multilateral trading system.

### Key tabulated figures (selected)
- World Output: 3.3 (2025), 3.3 (2026); difference from October 2024 WEO Projections: 0.1 (2025), 0.0 (2026).
- World Trade Volume (goods and services): 3.2 (2025), 3.3 (2026); difference from October 2024 WEO Projections: –0.2 (2025), –0.1 (2026).
- Oil price assumption (futures as of Nov 20, 2024): $69.76 (2025), $67.96 (2026).
- World Consumer Prices: 4.2 (2025), 3.5 (2026); difference from October 2024 WEO Projections: –0.1 (2025), –0.1 (2026).

*Source: IMF World Economic Outlook Update, January 2025 (text unit: 2. Evolution of 2025 Growth Forecasts).*

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_Source: https://www.imf.org/-/media/files/publications/weo/2025/update/january/english/text.pdf_