## Transcript of April 2024 World Economic Outlook Press Briefing

_IMF News, April 16, 2024_

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## Bibliographic details
- Published: April 16, 2024

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### Global outlook and key statistics
- Global growth was 3.2 percent in 2023 and is expected to remain at that level both in 2024 and 2025.
- This represents a 0.3 percentage point upgrade from our October objections for 2024, driven by stronger activity in the U.S., China, and other large emerging markets, but weaker activity in the Euro Area.
- Median inflation will decline from 4 percent at the end of last year to 2.8 percent by the end of this year and 2.4 percent at the end of 2025.
- A resilient growth and rapid disinflation are attributed to favorable supply developments, including the fading of energy price shocks and a striking rebound in labor supply supported by strong immigration in many advanced economies.
- Estimates of economic scarring relative to pre‑pandemic (January 2020) trends have been reduced for most regions and countries but have increased for low‑income developing countries.

### Inflation, monetary policy, and recent dynamics
- Inflation trends are encouraging but uneven: progress towards inflation targets has stalled since the beginning of the year in some countries.
- Risks to inflation: new price spikes from geopolitical tensions, persistent core inflation, services inflation remaining stubbornly high, and further trade restrictions pushing up goods inflation.
- Country divergences:
  - United States: strong recent performance reflects robust productivity growth and growth in labor supply, but also strong demand pressures. IMF calls for a cautious and gradual approach to easing by the Federal Reserve and expects the U.S. to start easing sometime in 2024 (baseline), while noting month‑to‑month volatility in inflation prints.
  - Euro Area: growth will rebound this year but from very low levels; little evidence of a hot economy and the European Central Bank will need to carefully calibrate the pivot towards monetary easing.
  - China: domestic demand remains affected by the downturn in its property sector; monetary policy can only be more accommodative if root causes in the property sector are addressed.
- Scenario on energy shocks: a sustained increase in oil prices by about 15 percent would increase inflation globally by about 0.7 percent and lower output; the Middle East tensions have increased oil prices but a sustained spike is not in the baseline.

### Regional and country‑level findings
- United States:
  - IMF projects a 1.9 percent increase in the structural fiscal balance for 2024.
  - Concerns that planned fiscal adjustments are often insufficient and may not be sustained, raising medium‑term fiscal and financial stability risks; higher term premiums could keep funding costs elevated despite monetary easing.
- Euro Area and Germany:
  - Germany growth is modest at 0.2 percent (recent figure cited).
  - Euro Area growth expected to rise from 0.4 percent in ‘23 to 0.8 percent in ‘24.
- China:
  - Q1 GDP year‑on‑year reported at 5.3 percent (released overnight ahead of the briefing); IMF’s January forecast for the year remained 4.6 percent pending assessment of new data.
  - Underlying weakness in the property sector persists; recommended measures include addressing struggling property developers (recapitalizing or winding down) and strengthening safety nets to sustain domestic consumption.
- Low‑income developing countries:
  - More scarring is estimated compared with other regions due to high energy and food prices, increased food insecurity, and limited fiscal buffers.
  - IMF stresses need for structural reforms to promote domestic and foreign investment and to improve human capital.
- Russia:
  - IMF revised Russia’s GDP growth in 2024 upward by 0.6 percentage points to 3.2 percent; growth expected to decline to 1.8 percent in 2025.
  - Drivers cited: steady oil export volumes, strong corporate investment (including state‑owned enterprises), robust private consumption, and increases in government security‑related spending; medium‑term growth remains well below pre‑war levels.
- Latin America and Caribbean (excluding Argentina and Venezuela):
  - Growth projected to slow from 2.7 percent to 2.5 percent; IMF upgraded the 2024 forecast by 0.2 percentage points.
  - Brazil: growth expected to fall from 2.9 percent in ‘23 to 2.2 percent in ‘24 and 2.1 percent in 2025; last year’s record agricultural production moderates.
  - Mexico: growth expected to decline from 3.2 percent in ‘23 to 2.4 percent in ‘24 and to 1.4 percent in 2025.
- Argentina:
  - Authorities implementing an ambitious stabilization plan centered on a strong fiscal anchor that eliminates central bank financing of the government.
  - IMF notes a sharp decline in month‑on‑month inflation and that authorities have recorded a fiscal surplus for the first time in over a decade; progress requires steadfast policy implementation.
- Sub‑Saharan Africa:
  - Growth for 2024 projected at 3.8 percent, up from 3.4 percent in 2023.
  - Investor appetite is recovering for some countries (Côte d’Ivoire, Benin, Kenya Eurobond activity noted); risks remain around election‑year spending and potential short‑term disruptions.
- Nigeria:
  - Growth revised from 2.9 percent to 3.3 percent for 2024.
  - Growth drivers: recovery in the oil sector, improved security, better agriculture (including dry season farming), expansion in financial and IT sectors.
  - Inflation projection revised up to 26 percent for this year, declining to 23 percent next year and 18 percent in 2026.
- India:
  - IMF noted upgrades: referenced projected growth rates of 6.8 percent and 6.5 percent over the last 2 years and a 0.3 percentage point upgrade for Fiscal Year 2024 to 2025; tight monetary and fiscal policy helping disinflation (4.6 percent this year, 4.2 percent next year), with upside risks from stronger private demand and reforms to boost foreign investment and exports.

### Risks, scenarios, and structural trends
- Risks broadly balanced:
  - Downside: renewed energy price spikes from geopolitical tensions, persistent core inflation, disruptive fiscal adjustments.
  - Upside: faster disinflation, timely structural reforms boosting productivity.
  - Insufficient fiscal action could temporarily stimulate growth but force a costlier adjustment later.
- Geopolitical fragmentation and trade reconfiguration:
  - Rising geo‑economic fragmentation is harming global growth prospects; reconfigured supply chains may benefit some economies but risk net efficiency losses and reduced global resilience.
- Technology and labor markets:
  - Artificial intelligence could boost productivity but poses risks of serious disruptions in labor and financial markets; infrastructure and regulatory frameworks are needed.
- Climate and weather shocks:
  - Increased weather shocks from climate change are impacting macroeconomic outcomes, with low‑income countries particularly vulnerable; extreme events (e.g., Pakistan floods referenced) have large economic costs.

### Policy recommendations and IMF instruments
- Rebuild fiscal buffers:
  - Priority to rebuild fiscal buffers in an environment of high real interest rates, modest growth, and elevated debts.
  - Credible fiscal consolidation should start early, be gradual, and be credible to lower funding costs and improve fiscal headroom and financial stability.
- Protect policy frameworks:
  - Preserve strengthened monetary, fiscal, and financial policy frameworks achieved in recent years, including protecting central bank independence.
- Support low‑income countries’ growth:
  - Reverse medium‑term growth decline via structural reforms to promote investment, increase fiscal revenues, and improve human capital.
- Manage transition risks:
  - Facilitate technology transfers and provide substantial private and public financing to support the green transition; multilateral cooperation is essential.
- IMF tools:
  - The Resilience and Sustainability Trust and technical assistance are highlighted as instruments to help countries build resilience, adapt to climate change, and implement mitigation strategies.

*Transcript of April 16, 2024 World Economic Outlook press briefing, IMF Communications Department.*

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## References

- [https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas](https://www.imf.org/en/About/senior-officials/Bios/pierre-olivier-gourinchas)
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