global economic growth in 2024-2025 will be 3.2% per year, and the median inflation rate will drop to 2.4%

Global inflation is slowing almost as quickly as it grew, and global GDP growth remains relatively stable – in the next two years it will be 3.2% per year, the International Monetary Fund (IMF) expects. For the Russian Federation, the fund’s forecast for this year was raised from 2.6% GDP growth to 3.2%, as for the United States. In China, on the contrary, growth will slow down, but this process may be accompanied by an increase in trade imbalances – fragmentation of the latter is already considered by the fund as one of the main risks for a sustainable slowdown in inflation.

Global economic growth in 2024-2025 will be 3.2% per year (forecast for this year increased by 0.1 percentage points), and the median inflation rate will fall from 2.8% at the end of this year to 2.4%. at the end of 2025, follows from the updated IMF forecast. According to the fund, the global economy hit rock bottom at the end of 2022; inflation, on the contrary, was then at its peak (9.4%). Maintaining stable growth rates while reducing price growth indicates a “soft” slowdown – the gap in the level of GDP with the forecast of January 2020 (before the pandemic) is narrowing, now for the world economy it is about 3% of GDP (for comparison, the fund took the forecast level of GDP at the end of 2024).

The fund, however, is concerned about the possible lack of sustainability of the reduction in inflation – the impact of monetary policy on prices this time turned out to be more restrained due to the spread of mortgages with fixed rates, the slowdown in inflation was primarily due to lower energy costs and the restoration of supplies. Now oil prices are rising again (with a simultaneous increase in free capacity in OPEC+ countries), and Chinese exporters may face new restrictions, which will also have an impact on inflation (last year, Chinese producers reduced prices due to weak demand). Fragmentation of world trade, according to the IMF, is underway, and turnover between countries from different “blocs” compared to average pre-pandemic trade volumes has fallen more significantly than within blocs, especially in terms of supplies of mechanical engineering and chemical industries. Trade ties between China and the United States are also weakening: the share of Chinese goods in American imports fell from 22% in 2017 to 14% in 2023, the IMF notes.

The two largest adjustments to GDP forecasts in the April update are for the United States and the Russian Federation.

Growth in the US is already higher than expected before the pandemic, and the forecast for this year has been improved by another 0.6 percentage points, to 2.7% (next year – by 0.2 percentage points, to 1.9 %). In the euro area, by contrast, growth estimates have been lowered to 0.8% this year and 1.5% in 2025. Unlike the United States, the European economy is not showing signs of overheating, but the ECB must be careful in easing policy to avoid a re-acceleration of inflation, the fund notes.

For Russia, the forecast for this year has been improved to 3.2% (plus 0.6 percentage points), for 2025 – to 1.8% (plus 0.7%). Growth will slow as the effects of high investment and consumption, supported by rising wages in a tight labor market, fade. The IMF estimate is noticeably higher than the World Bank forecast, which, as part of the latest revision, was increased for this year to 2.2% from 1.3%, for 2025 – to 1.1% from 0.9%.

The IMF forecast for China has not changed; it already includes a significant weakening in growth rates – from 5.2% in 2023 to 4.6% this year and 4.1% next year.

This is below the Chinese authorities’ official target for this year (5%). The Chinese economy continues to be affected by the consequences of the downturn in the real estate sector – credit “booms” are never resolved at once, the fund notes. But in conditions of suppressed domestic demand, a foreign trade surplus may grow, which, in turn, may increase disagreements in this area. Let us recall that US Treasury Secretary Janet Yellen, during her visit to China, spoke about the risks of significant overproduction of Chinese goods and a negative impact on the markets of other countries.

In the first quarter of this year, the Chinese economy grew stronger than expected – by 5.3%, according to the National Statistics Office. March statistical data turned out to be worse than forecasts: only 4.5% – this is the minimum since September 2023, while in January-February industrial production grew by 7% (after 6.8% in December, indicators for the first two months of the year are combined to smooth out the impact Chinese New Year). Overall, in the first quarter the figure increased by 6.1%. Retail turnover in March also increased by the minimum since July 2023, 3.1%, after an increase of 5.5% in January-February (analysts’ forecast – 4.5%). Investments, however, grew by 4.5% in the first quarter of the year – this is the maximum for the last year (forecast – 4.2%), while capital investment in real estate decreased year-on-year by 9.5%.

Tatiana Edovina, Kristina Borovikova