IMF warns of threats to disinflation path
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The news: The International Monetary Fund’s World Economic Outlook report has warned there are downside risks to economic growth amid a volatile global environment. The IMF expects global economic growth to reach 3.2% in 2024 and 2025.
The context: The report encourages carefully sequenced reforms to tackle long-term structural weaknesses to help revive productivity growth.
Uncertainty is high, and China’s weakening real estate market has attracted significant focus in the report, though the US is likely to perform more strongly than expected. The IMF further flagged concerns about disinflation being pushed off track by shocks.
What they said: “Global growth is expected to remain stable yet underwhelming,” the IMF report said.
“... Risks to the global outlook are tilted to the downside amid elevated policy uncertainty."
“Further disruptions to the disinflation process, potentially triggered by new spikes in commodity prices amid persistent geopolitical tensions, could prevent central banks to ease monetary policy, posing important challenges to fiscal policy and financial stability.”
Treasurer Jim Chalmers said the report indicates the “big risks weighing on a weak and fragmented global economy”.
“We face an uncertain global outlook in an unstable world, and this has undeniable consequences here at home,” Chalmers said.
“Escalating conflicts in the Middle East and Europe and a slowdown in China’s property sector pose substantial threats to the global economy.”
The source: Treasury media release
