IMF Forecasts Global Economy To Grow 3.2% In 2025

The International Monetary Fund released its World Economic Outlook today outlining critical growth forecasts and risk assessments for the year ahead and beyond. After growing by a predicted 3.2% in 2024, the IMF expects the global economy will grow by 3.2% in 2025. The good news is that global growth and rate cuts are poised to continue. However, geopolitical risks are also poised to remain threats to global stability and growth.

The IMF Forecasts Positive GDP Growth For 2025

The October 2024 IMF World Economic Outlook released today was titled "Policy Pivot, Rising Threats."

The IMF’s key forecasts and themes in the report changed little from the July 2024 outlook and showcased expectations of modestly positive growth, easing inflationary pressures, predictions of falling real policy interest rates, and a recognition of ongoing geopolitical risks.

The official IMF forecast for 2025 global real GDP growth was modestly positive at 3.2%, and the 2025 forecast follows the IMF’s predicted 3.2% growth rate in 2024 and a historical realized growth rate of 3.3% in 2023.

Global population growth generally contributes about 3% to global real GDP growth annually. The 2024 and 2025 IMF projections of global GDP growth should be considered modestly positive because any print of annual real GDP growth above 3% is considered expansionary for the global economy.

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Growth Highlights In The October 2024 IMF WEO

There were some noteworthy changes in the October 2024 IMF growth compared to the July 2024 forecasts. Most importantly, the U.S. growth outlook improved for 2024 and 2025, while the Chinese growth outlook weakened for 2024.

The October IMF growth forecast for 2024 U.S. GDP was raised to 2.8% from 2.6% in July, while the 2025 growth forecast for U.S. GDP was raised to +2.2% from +1.9%. The IMF reported that the 2023 pace of U.S. GDP growth was 2.9%.

For China, the IMF forecasts were less positive. The October IMF forecast for 2024 Chinese GDP was lowered to 4.8% from the July 2024 forecast of 5.0%. However, the IMF 2025 growth forecast for China was left unchanged at 4.5%. Both the 2024 and 2025 Chinese GDP growth forecasts were weaker than the IMF’s reported pace of Chinese growth at 5.2%.

The IMF Projects Lower Real Policy Rates Through 2026

Inflation rates have fallen globally in recent quarters, allowing central banks around the world to lower policy interest rates. Since inflation rates have slowed and are poised to fall further on trend, central banks will likely have more leeway to cut interest rates.

The October 2024 IMF World Economic Outlook included interest rate projections reflecting future lower real policy rates in the United States and the Eurozone through the end of 2026. Lower policy interest rates are likely to support economic growth in the quarters ahead.

What do you think of today’s growth forecasts from the IMF?

Let me know in the comments below.

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