News Today: The IMF announces victory over global inflation but warns of future risks

The International Monetary Fund (IMF) announced that the global battle against inflation has largely been won, although certain regions continue to face price pressures. Pierre-Olivier Gourinchas, Economic Counselor and Director of the IMF’s Research Department, presented the latest World Economic Outlook, predicting that global headline inflation will drop to 3.5% by the end of 2025, slightly below pre-pandemic averages.

This comes after headline inflation peaked at 9.4% year-on-year in the third quarter of 2022. Despite inflationary challenges, the global economy has shown resilience. Growth is forecasted to remain stable at 3.2% in 2024 and 2025, although some low-income and developing economies face downward revisions due to intensifying conflicts.

In advanced economies like the U.S., growth is expected to reach 2.8% in 2023 before stabilizing in 2025. Europe will see modest growth recovery next year, while emerging markets and developing economies will maintain robust performance, especially in emerging Asia, with a stable growth rate of 4.2%.

While the global disinflation process has been successful without triggering a global recession, Gourinchas warned that downside risks are increasing. He highlighted concerns about escalating regional conflicts, especially in the Middle East, which could disrupt commodity markets. Additionally, undesirable trade policies could lower output, and tight monetary policy may persist longer than expected.