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Inflation to go down, reports IMF

Disinflation is happening at a faster rate than expected, as global supply issues are resolved and recovery from the pandemic takes place, according to reports from the IMF. The report adds “Diminished inflation reflects the fading of relative price shocks–– notably those to energy prices––and their associated pass-through to core inflation.”


This provides some relief for the millions of people who are struggling to make ends meet, owing to the cost-of-living crisis the world is going through as energy prices soared and inflation was at its highest in 2022. As the world recovers, we can hope to see commodities and housing become more affordable. 


There are threats to this outlook due to the ongoing conflict in the Middle East and Red Sea with the disruption in trade routes through the Suez Canal, and with advanced economies looking to enforce stricter migration policies.


Inflation in IMF member countries


The World Economic Outlook is a publication by the IMF which gives us an overview of how countries and regions worldwide are performing and makes predictions for how economies will look in the next two years. The report was published in October 2023, with a revision being released today. Some other highlights from the report include:


UK to have significant growth in 2025

As the effects of the increased energy prices fade, the pressure on the financial conditions is eased and sectors like real estate recover. This points to a growth in the economy by 0.9 percentage points from 0.5 per cent in 2023 to 1.6 per cent in 2025. Although there has been a markdown on the projected growth owing to recent developments.


India will continue to show strong growth over the next two years

India’s economic growth is projected to be at a high rate of 6.5 per cent for 2024 and 2025. There has been a markup in the rate of growth of 0.2 percentage points owing to continued strong consumer demand and growth in the labour market. As the country heads towards its general elections, it would be interesting to see how new policy implementations affect these predictions over time and how the parties involved shape their manifestos around economic growth.


Russia to show growth despite economic sanctions

Russia is projected to grow at 2.6 per cent in 2024. The projected growth calls into question the impact economic sanctions have on the P-5 member. The increased growth is attributed to military spending and increased consumer demand. As it appears, the Russian economy is still holding up strongly despite the US backing Ukraine and providing funding. What remains to be seen is how sustainable this conflict is for both sides, as support for Ukraine wanes in the West, with many saying the US should look to improve their country first, before providing billions in aid. 


USA to have a fall in growth as labour market pressure goes down


With tighter fiscal policies and central banks increasing the cost of borrowing coupled with relief on the labour market, USA’s growth is expected to be 2.1 and 1.7 per cent for 2024 and 2025 respectively.


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