IMF Predicts Inflation Relief by End of 2025 Amid Slowing Global Growth and Rising Inequality

IMF predicts inflation will fall to 3.5% by the end of 2025, but warns of slowing growth, increasing inequality, and geopolitical tensions threatening global stability.

The International Monetary Fund (IMF) forecasts global inflation to drop to 3.5% by the end of 2025, signaling relief after years of inflationary pressure. However, despite this optimistic outlook, the IMF warns of looming challenges, including slower global growth, increasing income inequality, and the potential impact of escalating geopolitical tensions. The organization also stresses the need for significant policy reforms to stabilize the global economy.

IMF Chief Economist Pierre-Olivier Gourinchas speaks on the global outlook, forecasting inflation relief but warning of ongoing economic challenges.

Key Points:

1. Inflation Expected to Normalize by End of 2025:

   IMF Chief Economist Pierre-Olivier Gourinchas emphasized that global inflation peaked at 9.4% in 2022 and will fall to 3.5% by 2025. While inflation is nearing central bank targets, it remains a key focus as the global economy shows resilience.

2. Slowing Growth and Rising Inequality:

   Despite inflation easing, the IMF warns of ongoing economic challenges. Global growth is expected to remain at a low of 3.2% in 2024 and 2025, among the weakest in decades. The disparity between rich and poor countries may widen, making income inequality a significant concern.

3. Geopolitical Risks Could Disrupt Recovery:

   Tensions in the Middle East and an impending U.S. Presidential election add uncertainty to the global economic outlook. These risks could destabilize commodity markets, further complicating recovery efforts.

4. Need for a "Policy Triple Pivot":

   The IMF calls for urgent action in three areas: interest rate reforms, government spending, and productivity-enhancing reforms to ensure sustainable long-term growth.

Related: Cryptocurrency Winter Incoming? Bitcoin Slumps as Inflation Looms

While the IMF's projection of easing inflation brings hope for lower living costs and interest rates, it warns of significant risks that could derail recovery efforts. Geopolitical tensions, economic inequality, and stagnating growth remain central challenges. Policymakers must implement reforms to navigate these hurdles and achieve sustained economic recovery.

Source: Cointelegraph