IMF Forecasts Steady Global Growth Amid Uncertainty

In a recent press briefing, International Monetary Fund (IMF) Managing Director Kristalina Georgieva hinted at steady global growth and disinflation despite uncertainties surrounding the US economy under the incoming administration of President-elect Donald Trump.

Georgieva stated that the US economy is doing "quite a bit better" than expected, but emphasized that there are high uncertainties around trade policies under the new administration, which could pose challenges to global economic stability. The uncertainty, particularly regarding tariffs and taxes, has led to long-term interest rates increasing in anticipation of potential monetary policy decisions.

However, Georgieva also noted that with inflation approaching the Federal Reserve's target level and data showing a stable labor market, the Fed may be inclined to wait for more data before adjusting interest rates further. Overall, interest rates are expected to remain "somewhat higher" than anticipated, at least in the short term.

The release of the IMF World Economic Outlook on January 17 will provide an update to its global forecast and offer insight into the outlook for global economic growth this year. Georgieva highlighted that this report has significant implications for investment decisions globally due to the influence of US policy directions.

Key trends foreseen by the IMF include sustained growth in the US, albeit with uncertainty surrounding trade policies, as well as divergent performance across regions. The European Union is expected to slow slightly, while India's growth is projected to soften, whereas Brazil faces higher inflation.

Further emphasis was placed on the challenges faced by emerging markets and low-income countries due to fiscal constraints post-pandemic and ongoing reforms required for sustainable economic growth. Georganieva underlined the need for policy coherence in boosting country-specific resilience, particularly in the face of global headwinds.

In Key Takeaways:

• Steady global growth expected despite uncertainties over US trade policies.
• Strong US dollar may impact emerging-market economies and low-income countries.
• IMF sees diverse economic performances across regions with varying inflation rates and labor market stability.