{ "title": "Transcript of January 2024 WEO Update Press Briefing", "publication": "IMF News, January 31, 2024", "sourceUrl": "https://www.imf.org/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing", "canonical": "https://www.imf.org/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing", "overlayPath": "/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/index.md", "summary": "Transcript of January 2024 WEO Update Press Briefing", "publishDate": "2024-01-31", "sections": [ { "heading": "Global outlook and headline projections", "content": "- Global growth under the baseline forecast: 3.1 percent this year (a 0.2 percentage point upgrade from October), edging up to 3.2 percent next year.\n- World trade growth projected at 3.3 percent this year and 3.6 percent next year; historical average growth rate: 4.9 percent.\n- Excluding Argentina, global headline inflation will decline to 4.9 percent this year, down 0.4 percentage point from the October projection.\n- Advanced economies inflation will average around 2.6 percent this year, described as close to Central Bank targets.\n- Advanced economies growth: 1.5 percent this year, returning to 1.8 percent next year." }, { "heading": "Inflation dynamics and monetary policy", "content": "- Disinflation driven substantially by lower commodity and energy prices rather than solely by contraction of economic activity.\n- Two channels through which prior monetary tightening contributed:\n - Shifting expectations: rapid tightening convinced agents that high inflation would not be allowed to persist.\n - Synchronized tightening lowered world energy demand and prices, directly reducing headline inflation.\n- Risks to inflation:\n - Core/services inflation persistence and wage developments could sustain price pressures.\n- Central bank stance and cutting cycle:\n - IMF expectation: central banks likely to hold off on easing until maybe the second half of 2024; anticipated easing by the Federal Reserve, the European Central Bank, the Bank of England, and others may begin in the second half of 2024.\n - Warning against premature easing that would undermine credibility, and against waiting too long as strains grow in interest-rate-sensitive sectors (e.g., construction) and loan activity has declined markedly in many countries." }, { "heading": "Key upside and downside risks (risk balance)", "content": "- Upside risks:\n - Inflation could fall faster than expected, allowing central banks to ease sooner.\n - Election-year fiscal slippage (delayed fiscal consolidation) could temporarily boost activity.\n- Downside risks:\n - Renewed geopolitical tensions (Middle East, Red Sea shipping disruptions) could disrupt commodities and supply chains.\n - Financial conditions could tighten, raising long-term interest rates and pressure on economies and governments.\n - Persistent core inflation driven by services and wages." }, { "heading": "Fiscal risks and policy recommendations", "content": "- Most countries exited the pandemic and energy crisis with higher public debt levels and higher borrowing costs; elevated fiscal risks are the “biggest challenge.”\n- Immediate steps:\n - Phase out fiscal measures introduced to offset high energy prices “right away,” since the energy crisis is behind us.\n- Required approach:\n - Implement steady fiscal consolidation with a nontrivial first installment.\n - Improve and enforce fiscal frameworks to ensure future consolidation efforts are both sizable and credible.\n - Balance risks of doing too little too late (leading to fiscal crises) and of doing too much too soon (jeopardizing growth and climate transition efforts)." }, { "heading": "Emerging markets, low-income countries, and IMF support", "content": "- Emerging markets broadly more resilient with stronger-than-expected growth and stable external balances, helped by improved monetary and fiscal frameworks.\n- Divergence in policies across countries can spur capital outflows and currency volatility; stronger buffers are recommended in line with the Fund’s integrated policy framework.\n- Low income and developing countries, many in Africa, face acute pressure on borrowing costs and are being increasingly priced out of markets, crowding out investment.\n- Recommended actions for high-risk debt countries:\n - Mobilize revenues, improve policy frameworks, and pursue orderly debt restructuring if at high risk of debt distress.\n- IMF financial assistance instruments cited:\n - Temporary Food Shock Window\n - Resilience and Sustainability Facility" }, { "heading": "Geoeconomic fragmentation and trade barriers", "content": "- Large rise in trade-distorting measures: around 3,000 in 2023 versus a little above a thousand in 2019.\n- Geoeconomic fragmentation and rising trade barriers can depress global output; estimated aggregate costs cited in analysis range from 3 percent of world GDP to 7 percent of world GDP.\n- Emerging and developing countries tend to be most adversely affected by increased trade tensions.\n- Policy prescription: limit geoeconomic fragmentation, remove trade barriers (including on low-carbon technology products crucial for the climate transition), and keep economies interconnected through multilateral cooperation." }, { "heading": "Regional and country specifics — United States, Euro area, China", "content": "- United States: slower growth expected as tight monetary policy continues working through the economy; tighter labor market conditions noted relative to the Euro area.\n- Euro area: rebound expected after challenging 2023; inflation dynamics affected more by earlier energy/gas shocks; wage catch-up is a key concern.\n- China: weaker consumption and investment continue to weigh on activity." }, { "heading": "Sub-Saharan Africa, South Africa, Nigeria, Zambia, and region-specific notes", "content": "- Sub-Saharan Africa:\n - Growth projected to rise as negative effects of earlier weather shocks subside and supply issues improve.\n - IMF projection mentioned: 4.1 percent (reference to 2025 improvement).\n - Medium-term growth around 4.3 percent in forecast commentary, above global average but with modest per capita gains given rapid population growth.\n- South Africa:\n - 2023 estimated growth: 0.6 percent.\n - 2024 forecast: 1 percent (downgrade from 1.8 percent previously).\n - Main downgrade drivers: logistical sector disruptions (rail, ports) and continuing electricity production challenges.\n - 2025 forecast: 1.3 percent as bottlenecks ease.\n - Reform priorities: resolve energy and logistical crises, bring power plants back online, accelerate renewable energy, open competition in network industries (energy, ports, rail, telecoms), and address governance weaknesses to attract private investment.\n- Nigeria:\n - Slight downgrade for 2024: 3 percent (a negative 0.1 percentage point revision from prior).\n - Inflation trajectory cited: 24.6 percent in 2023, forecast 23 percent this year, and 15.5 percent into 2025 (efforts to bring inflation down are top priority).\n - Central Bank policy: policy rate raised to 18.8 percent (cited as past tightening to lower inflation).\n - Policy recommendations: revenue mobilization, strengthen revenue administration, widen tax base to create fiscal space for social support while safeguarding fiscal sustainability.\n - Sovereign spread noted: about 570 (down from about 703 months ago).\n- Zambia:\n - Growth rising from 3.6 percent last year; medium-term growth to be underpinned by reforms in authorities’ program and debt restructuring to support investments in education and health.\n- Egypt:\n - Tourism strong in 2023 but slowed since Gaza conflict; Red Sea attacks may impact foreign exchange inflows (~$700 million a month noted).\n - IMF: securing additional financing is essential to support reforms, bring down inflation, and restore growth.\n - Forecast: growth recovering from 3 percent this year to 4.7 percent next year, supported by IMF financing and program reviews." }, { "heading": "Argentina specifics", "content": "- Argentina 2024 growth: negative 2.8 percent in 2024 (a sizable downward adjustment of about 5.5 percentage points compared to October projections), with growth resuming in 2025 at about 5 percent (conditional on fiscal consolidation).\n- Inflation context:\n - Year-end-on-year-end inflation in Argentina in 2023 cited as in excess of 211 percent.\n - That high level raised the regional average by almost 76 percentage points (commentary).\n - Expected path: year-end-on-year-end inflation around 150 percent by the end of 2024, declining further thereafter if fiscal consolidation is implemented.\n- Key drivers and policy stance:\n - Root causes: prior rapid monetary expansion and significant monetary financing of government spending.\n - Current administration aims for a 2 percent of GDP primary surplus in 2024 (about a five percentage point of GDP fiscal adjustment); removal of subsidies and an exchange rate adjustment contributed to near-term spikes in inflation but are intended to restore stability.\n - Major risk: whether fiscal consolidation can be implemented durably." }, { "heading": "Shipping disruptions and the Red Sea", "content": "- Attacks in the Red Sea have increased shipping costs and delays as vessels reroute around Africa.\n- To date, IMF assessment: impact on inflation in European economies is “fairly modest” and markets have not seen a sizable macroeconomic effect beyond the region; oil prices have not seen a significant spike as of the briefing.\n- Situation is being monitored closely; further briefings and region-specific updates planned." }, { "heading": "Additional institutional and multilateral notes", "content": "- Progress noted: recent 50 percent increase of the Fund's permanent resources.\n- Governance representation: creation of a 25th Chair of the IMF Executive Board for Sub-Saharan Africa and the African Union’s entry as a permanent member of the Group of 20; South Africa’s presidency of the G-20 in 2025 highlighted.\n\nTranscript of January 30, 2024 press briefing — IMF Communications Department; Pierre-Olivier Gourinchas and Daniel Leigh.\n\n---\n\n\n References\n\n- https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing" } ], "bullets": [ "[Markdown version](/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/index.md)", "[Structured JSON version](/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/index.json)", "[Bundle manifest](/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/bundle-manifest.json)", "Published: January 31, 2024", "Global growth under the baseline forecast: 3.1 percent this year (a 0.2 percentage point upgrade from October), edging up to 3.2 percent next year.", "World trade growth projected at 3.3 percent this year and 3.6 percent next year; historical average growth rate: 4.9 percent.", "Excluding Argentina, global headline inflation will decline to 4.9 percent this year, down 0.4 percentage point from the October projection.", "Advanced economies inflation will average around 2.6 percent this year, described as close to Central Bank targets.", "Advanced economies growth: 1.5 percent this year, returning to 1.8 percent next year.", "Disinflation driven substantially by lower commodity and energy prices rather than solely by contraction of economic activity.", "Two channels through which prior monetary tightening contributed:", "Risks to inflation:", "Central bank stance and cutting cycle:", "Upside risks:", "Downside risks:", "Most countries exited the pandemic and energy crisis with higher public debt levels and higher borrowing costs; elevated fiscal risks are the “biggest challenge.”", "Immediate steps:", "Required approach:", "Emerging markets broadly more resilient with stronger-than-expected growth and stable external balances, helped by improved monetary and fiscal frameworks.", "Divergence in policies across countries can spur capital outflows and currency volatility; stronger buffers are recommended in line with the Fund’s integrated policy framework.", "Low income and developing countries, many in Africa, face acute pressure on borrowing costs and are being increasingly priced out of markets, crowding out investment.", "Recommended actions for high-risk debt countries:", "IMF financial assistance instruments cited:", "Large rise in trade-distorting measures: around 3,000 in 2023 versus a little above a thousand in 2019.", "Geoeconomic fragmentation and rising trade barriers can depress global output; estimated aggregate costs cited in analysis range from 3 percent of world GDP to 7 percent of world GDP.", "Emerging and developing countries tend to be most adversely affected by increased trade tensions.", "Policy prescription: limit geoeconomic fragmentation, remove trade barriers (including on low-carbon technology products crucial for the climate transition), and keep economies interconnected through multilateral cooperation.", "United States: slower growth expected as tight monetary policy continues working through the economy; tighter labor market conditions noted relative to the Euro area.", "Euro area: rebound expected after challenging 2023; inflation dynamics affected more by earlier energy/gas shocks; wage catch-up is a key concern.", "China: weaker consumption and investment continue to weigh on activity.", "Sub-Saharan Africa:", "South Africa:", "Nigeria:", "Zambia:", "Egypt:", "Argentina 2024 growth: negative 2.8 percent in 2024 (a sizable downward adjustment of about 5.5 percentage points compared to October projections), with growth resuming in 2025 at about 5 percent (conditional on fiscal consolidation).", "Inflation context:", "Key drivers and policy stance:", "Attacks in the Red Sea have increased shipping costs and delays as vessels reroute around Africa.", "To date, IMF assessment: impact on inflation in European economies is “fairly modest” and markets have not seen a sizable macroeconomic effect beyond the region; oil prices have not seen a significant spike as of the briefing.", "Situation is being monitored closely; further briefings and region-specific updates planned.", "Progress noted: recent 50 percent increase of the Fund's permanent resources.", "Governance representation: creation of a 25th Chair of the IMF Executive Board for Sub-Saharan Africa and the African Union’s entry as a permanent member of the Group of 20; South Africa’s presidency of the G-20 in 2025 highlighted.", "[https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas](https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/index.md", "json": "/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/index.json", "bundleManifest": "/en/news/articles/2024/01/31/tr013024-transcript-of-january-2024-weo-update-press-briefing/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:42:59.674Z" }