The global economy is experiencing a steady but slow recovery, with growth projected to remain at 3.2 percent during 2024 and 2025. Advanced economies are expected to see a slight acceleration in growth while emerging market and developing economies will experience a modest slowdown.
Global Inflation Update
Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025. However, core inflation is projected to decline more gradually.
Regional Variations
The global economy’s gradual recovery from the pandemic and Russia’s invasion of Ukraine remains on track, with China’s reopened economy rebounding strongly. Supply chain disruptions are unwinding, and dislocations to energy and food markets caused by the war are receding.
Risks and Challenges
Despite the positive trends, risks and challenges persist. Inflation is stickier than anticipated, and core inflation has not yet peaked in many countries. The financial sector is also vulnerable, with recent banking instability highlighting the need for vigilance.
Policy Implications
Policymakers must remain cautious and responsive to changing conditions. Monetary policy should focus on bringing inflation down, while fiscal policy can play an active role in cooling off economic activity and supporting monetary policy
