{
  "title": "Transcript of World Economic Outlook (WEO) Update, January 2025",
  "publication": "IMF News, January 17, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/01/17/tr011725-january-2025-world-economic-outlook-update",
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  "summary": "MR. DE HARO: Happy New Year and welcome. I'm José Luis de Haro with the Communications Department here at the IMF. And we are gathered here today for the launch of the World Economic Outlook Update.",
  "publishDate": "2025-01-17",
  "sections": [
    {
      "heading": "Global projections and headline findings",
      "content": "- Global growth remains steady at 3.3 percent this year and next.\n- Global inflation is projected to decline to 4.2 percent this year and 3.5 percent next year.\n- The recent large global disruptions (Pandemic, the war in Ukraine, and the associated inflation surge) are described as behind us; \"This is the end of a cycle and the beginning of a new one.\""
    },
    {
      "heading": "Major country and regional outlooks (projections and key points)",
      "content": "- United States\n  - Growth expected to be 2.7 percent this year.\n  - Potential policy shifts (fiscal stimulus, deregulation, tariffs, curbs on migration) could raise near-term output and inflation; combined effects likely strengthen the dollar and tighten external financial conditions.\n  - Higher inflation would prevent the Federal Reserve from cutting rates as initially planned.\n\n- Euro area\n  - Growth revised downwards and will increase only modestly to 1 percent in 2025.\n  - Risks: low consumer confidence, persistence of high energy prices (especially relative to the United States), weak manufacturing momentum, and fiscal vulnerabilities in some countries.\n  - Tension noted between falling short-term policy rates and rising long-term yields; limited monetary space and low fiscal space could constrain stabilization options.\n\n- China\n  - Projected growth of 4.6 percent this year.\n  - Potential downside risks: risk of a debt-deflation trap; decline in Chinese government bond yields indicates rising investor concern.\n  - Longer-term structural trends: potential growth has decreased in line with secular and demographic trends; pivot to more domestically driven growth has not yet occurred.\n\n- Japan\n  - Pickup in growth projected to 1.1 percent in 2025 and 0.8 percent in 2026.\n  - Monetary policy: Bank of Japan already tightened in 2024; IMF expects a very gradual further tightening with two more rate hikes in 2025 and two additional rate hikes in 2026.\n\n- United Kingdom\n  - Projected growth of 1.6 percent for 2025 (0.1 percentage point upward revision since October).\n  - Factors supporting growth: increased public investment from the October budget, pickup in real incomes and consumption, expected Bank of England easing (about 1 cut per quarter in 2025).\n\n- Argentina\n  - Projected growth of 5 percent in 2025 and 5 percent in 2026.\n  - 2024 featured a severe contraction driven by a fiscal consolidation of about 5 percent of GDP and extreme inflation (25 percent month-on-month in December 2023/early 2024 after the peso devaluation).\n  - Recovery drivers: rebound already observed in H2 2024 (Q3 growth 4 percent quarter-on-quarter), rising real wages, increased bank credit, and stabilization efforts.\n  - Recent inflation prints: December inflation about 2.7 percent; November 2.4 percent.\n\n- Egypt\n  - Growth forecast revised down to 3.6 in 2025 and to 4.1 in 2026 (downgrades of 0.5 percentage point and 1 percentage point respectively).\n  - Main driver of downgrade: weakened confidence amid foreign exchange restrictions and shortages; recovery expected as FX market conditions and investor sentiment improve, supporting mining and manufacturing activity.\n\n- Sub-Saharan Africa\n  - Projected growth of 4.2 in 2025 (unchanged from October) and 4.2 in 2026 (slight downgrade from October).\n  - Key constraints: conflicts, natural disasters, limited financing; vulnerability to tighter global financial conditions and a stronger dollar.\n\n- South Africa\n  - Projected growth 1.5 in 2025 and 1.6 in 2026 (largely unchanged from October).\n  - 2024 growth was weaker than expected due to drought-related agricultural decline; recovery expected as electricity reforms advance.\n  - Inflation projected to moderate reflecting monetary policy actions, moderated expectations, lower global oil prices, and a largely closed output gap.\n\n- Italy\n  - Growth projected below 1 percent, with 2024 and 2025 downward revisions reflecting weaker outturns, stalled momentum in EU Recovery and Resilience Plan spending, and increased geopolitical risk and policy uncertainty.\n\n- Spain\n  - Estimated growth 3.1 percent for 2024 (0.2 percentage point revision) and 2.3 percent for 2025 (0.2 percentage point upward revision).\n  - Strength from robust exports including record tourism revenues, employment gains, gradual decline in household saving rate, resilient financial system, large current account surplus, and lower fiscal deficit.\n\n- Russia\n  - Slight upward revision for 2025 to 1.4 percent; sharp slowdown from estimated 2024 growth of 3.8 percent.\n  - 2024 inflation 8.3 percent; sequential inflation above 9 percent.\n  - Policy response: Central Bank of Russia hiked interest rates to 21 percent; high rates will weigh on activity."
    },
    {
      "heading": "Trade, productivity, and structural observations",
      "content": "- Global trade: slight downward revision for 2025–2026 linked to elevated trade policy uncertainty and potential new rounds of trade tensions; trade-to-GDP has remained relatively stable in recent years.\n- Productivity divergence: the United States has experienced persistently stronger productivity growth than Europe, notably in the technology sector. Structural factors in the EU include resource misallocation, lower business dynamism, a deficit of scalable startups, and an overabundance of low-growth mature firms.\n- Policy implication: completing single market integration (capital, competition, cross-border scaling) and ambitious structural reforms are important to boost productivity and growth."
    },
    {
      "heading": "Risks and scenarios highlighted",
      "content": "- Elevated economic policy uncertainty due to likely policy shifts from newly elected governments in 2024.\n- Near-term risks (country-specific):\n  - Euro area: greater-than-expected slowdown from weak manufacturing and fiscal vulnerabilities.\n  - China: downside risk of debt-deflation dynamics and rising investor concern in bond markets.\n  - United States: demand-stimulating policies (fiscal stimulus, confidence boom) could raise near-term output and inflation; supply-constraining policies (tariffs, migration curbs) could lower output and raise prices. Net near-term effect on output uncertain but assessed as likely upward; price pressures likely to increase.\n- Medium-term risks (more uniformly to the downside):\n  - Curbs on migration and protectionist policies reducing potential output.\n  - Fiscal expansions raising public debt and creating fiscal vulnerabilities.\n  - Deregulation potentially boosting output but also raising financial vulnerabilities and the risk of boom-bust dynamics.\n- Inflation expectations:\n  - While inflation expectations remained well anchored during the recent inflation episode, there is a risk that renewed price pressures could erode central banks’ credibility and de-anchor expectations, complicating disinflation."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Monetary policy: central banks should remain vigilant and be ready to act forcefully if inflation breaks out again; also monitor and manage financial stability risks.\n- Fiscal policy: restore fiscal buffers now, while preserving growth; delaying needed adjustments in a low-growth, high-interest-rate environment risks market loss of confidence and added fiscal pressures.\n- Structural reforms: pursue ambitious reforms to improve resource allocation, increase government revenues, foster innovation and competition, and strengthen multilateral institutions to support a more resilient and sustainable global economy.\n- On limited monetary space and high long-term yields: countries should use fiscal policy prudently to stabilize economies when monetary policy is constrained, but high long-term yields limit fiscal space—underscoring the need to rebuild buffers.\n\nTranscript of World Economic Outlook (WEO) Update, January 17, 2025 — IMF Communications Department\n\n---\n\n\n References\n\n- Arab Republic of Egypt and the IMF\n- Argentina and the IMF\n- Japan and the IMF\n- South Africa and the IMF\n- Spain and the IMF\n- United States and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/01/17/tr011725-january-2025-world-economic-outlook-update"
    }
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    "Published: January 17, 2025",
    "Global growth remains steady at 3.3 percent this year and next.",
    "Global inflation is projected to decline to 4.2 percent this year and 3.5 percent next year.",
    "The recent large global disruptions (Pandemic, the war in Ukraine, and the associated inflation surge) are described as behind us; \"This is the end of a cycle and the beginning of a new one.\"",
    "United States",
    "Euro area",
    "China",
    "Japan",
    "United Kingdom",
    "Argentina",
    "Egypt",
    "Sub-Saharan Africa",
    "South Africa",
    "Italy",
    "Spain",
    "Russia",
    "Global trade: slight downward revision for 2025–2026 linked to elevated trade policy uncertainty and potential new rounds of trade tensions; trade-to-GDP has remained relatively stable in recent years.",
    "Productivity divergence: the United States has experienced persistently stronger productivity growth than Europe, notably in the technology sector. Structural factors in the EU include resource misallocation, lower business dynamism, a deficit of scalable startups, and an overabundance of low-growth mature firms.",
    "Policy implication: completing single market integration (capital, competition, cross-border scaling) and ambitious structural reforms are important to boost productivity and growth.",
    "Elevated economic policy uncertainty due to likely policy shifts from newly elected governments in 2024.",
    "Near-term risks (country-specific):",
    "Medium-term risks (more uniformly to the downside):",
    "Inflation expectations:",
    "Monetary policy: central banks should remain vigilant and be ready to act forcefully if inflation breaks out again; also monitor and manage financial stability risks.",
    "Fiscal policy: restore fiscal buffers now, while preserving growth; delaying needed adjustments in a low-growth, high-interest-rate environment risks market loss of confidence and added fiscal pressures.",
    "Structural reforms: pursue ambitious reforms to improve resource allocation, increase government revenues, foster innovation and competition, and strengthen multilateral institutions to support a more resilient and sustainable global economy.",
    "On limited monetary space and high long-term yields: countries should use fiscal policy prudently to stabilize economies when monetary policy is constrained, but high long-term yields limit fiscal space—underscoring the need to rebuild buffers.",
    "[Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)",
    "[Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)",
    "[Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)",
    "[South Africa and the IMF](http://www.imf.org/external/country/ZAF/index.htm)",
    "[Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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