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IMF projects global inflation to decline over next 2 years
(MENAFN) The International Monetary Fund (IMF) has projected a decrease in global headline inflation, forecasting a decline from an average of 6.7 percent in 2023 to 5.8 percent in 2024, as detailed in its latest World Economic Outlook report released on Tuesday. Furthermore, the organization estimates that inflation will continue to drop, reaching 4.3 percent in 2025. This expected decline in inflation rates over the next two years is attributed to a broad reduction in core inflation, which contrasts with 2023, where lower fuel prices primarily drove the inflation decrease.
The report indicates that advanced economies are likely to experience a more rapid decline in inflation compared to emerging markets and developing economies. Specifically, advanced economies are anticipated to see inflation decrease by about 2 percentage points from 2023 to 2024, stabilizing around 2 percent by 2025. In contrast, inflation in emerging markets and developing economies is projected to fall from 8.1 percent in the previous year to 7.9 percent in 2024, with further expectations of a decline to 5.9 percent in 2025.
The IMF's analysis also highlights that most economies are expected to reach their inflation targets by the end of 2025. In particular, inflation in Asia is projected to align closely with that of advanced economies, anticipated to be at 2.1 percent this year and rising slightly to 2.7 percent in the following year. This is largely due to early monetary tightening measures and price controls implemented in several countries within the region.
However, the report emphasizes that inflation rates in regions such as emerging and developing Europe, the Middle East, North Africa, and sub-Saharan Africa are expected to remain in double digits for the near future. For instance, emerging and developing Europe is projected to see a decrease in annual average inflation from 17.1 percent last year to 16.9 percent this year, eventually falling to 11.1 percent by 2025. Similarly, inflation in the Middle East and Central Asia is predicted to drop from 15.6 percent this year to 14.6 percent next year, with a forecasted rate of 10.7 percent by 2025. In sub-Saharan Africa, inflation is estimated to rise slightly to 18.1 percent this year before decreasing to 12.3 percent in 2025.
The report indicates that advanced economies are likely to experience a more rapid decline in inflation compared to emerging markets and developing economies. Specifically, advanced economies are anticipated to see inflation decrease by about 2 percentage points from 2023 to 2024, stabilizing around 2 percent by 2025. In contrast, inflation in emerging markets and developing economies is projected to fall from 8.1 percent in the previous year to 7.9 percent in 2024, with further expectations of a decline to 5.9 percent in 2025.
The IMF's analysis also highlights that most economies are expected to reach their inflation targets by the end of 2025. In particular, inflation in Asia is projected to align closely with that of advanced economies, anticipated to be at 2.1 percent this year and rising slightly to 2.7 percent in the following year. This is largely due to early monetary tightening measures and price controls implemented in several countries within the region.
However, the report emphasizes that inflation rates in regions such as emerging and developing Europe, the Middle East, North Africa, and sub-Saharan Africa are expected to remain in double digits for the near future. For instance, emerging and developing Europe is projected to see a decrease in annual average inflation from 17.1 percent last year to 16.9 percent this year, eventually falling to 11.1 percent by 2025. Similarly, inflation in the Middle East and Central Asia is predicted to drop from 15.6 percent this year to 14.6 percent next year, with a forecasted rate of 10.7 percent by 2025. In sub-Saharan Africa, inflation is estimated to rise slightly to 18.1 percent this year before decreasing to 12.3 percent in 2025.
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