World Economic Outlook Update, January 2024: Moderating Inflation and Steady Growth Open Path to Soft Landing
World Economic Outlook, January 2024
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- World Economic Outlook Update, January 2024: Moderating Inflation and Steady Growth Open Path to Soft Landing
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Bibliographic details
- Published: January 30, 2024
Baseline projections
- Global growth is projected to stay at 3.1 percent in 2024 and rise to 3.2 percent in 2025.
- The 2024 forecast is 0.2 percentage point higher than that in the October 2023 World Economic Outlook (WEO) due to greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China.
- The forecast for 2024–25 is below the historical (2000–19) average of 3.8 percent, reflecting elevated central bank policy rates, withdrawal of fiscal support amid high debt, and low underlying productivity growth.
- Global headline inflation is expected to fall to 5.8 percent in 2024 and to 4.4 percent in 2025, with the 2025 forecast revised down.
Risks, scenarios, and outlook balance
- The risks to global growth are broadly balanced and a soft landing is a possibility; with disinflation and steady growth, the likelihood of a hard landing has receded.
- Upside risks:
- Faster disinflation could lead to further easing of financial conditions.
- Looser fiscal policy than assumed could imply temporarily higher growth, albeit with the risk of a more costly adjustment later on.
- Stronger structural reform momentum could bolster productivity with positive cross-border spillovers.
- Downside risks:
- New commodity price spikes from geopolitical shocks—including continued attacks in the Red Sea—and supply disruptions or more persistent underlying inflation could prolong tight monetary conditions.
- Deepening property sector woes in China.
- Elsewhere, a disruptive turn to tax hikes and spending cuts could cause growth disappointments.
Policy priorities and recommendations
- Monetary policy: Successfully manage the final descent of inflation to target by calibrating monetary policy in response to underlying inflation dynamics and—where wage and price pressures are clearly dissipating—adjusting to a less restrictive stance.
- Fiscal policy: With inflation declining and economies better able to absorb effects of fiscal tightening, renew focus on fiscal consolidation to:
- Rebuild budgetary capacity to deal with future shocks.
- Raise revenue for new spending priorities.
- Curb the rise of public debt.
- Structural reforms: Implement targeted and carefully sequenced structural reforms to reinforce productivity growth, improve debt sustainability, and accelerate convergence toward higher income levels.
- Multilateral coordination: Improve efficiency in multilateral coordination for debt resolution to avoid debt distress, create space for necessary investments, and mitigate the effects of climate change.
Source: World Economic Outlook Update, January 2024
Content in this bundle
- WEO January 2024 — Dataset overview
- Full Report