‘Battle against inflation is almost won’ says IMF chief economist

Global inflation, which has suppressed risk assets like cryptocurrencies and tech stocks, is set to fall to 3.5% by the end of 2025, thanks largely to a resilient world economy, the International Monetary Fund said. 

“In most countries, inflation is now hovering close to central bank targets. Now inflation came down while the global economy remained resilient. Growth is projected to hold steady at 3.2% in 2024 and 2025,” he added. 

Still, Gourinchas noted that escalating geopolitical and trade tensions in the Middle East and a looming presidential election in the United States create considerable uncertainty. 

“These downside risks include an escalation in regional conflicts, especially in the Middle East, which could pose serious risks for commodity markets.”

Despite the optimistic predictions, the IMF called for a “policy triple pivot” to fix interest rates, tackle government spending, and introduce key reforms to boost productivity. 

The report said a decline in inflation while avoiding a global recession should be seen as a “major achievement.” Still, it conceded that the global economy’s growth outlook was largely unchanged and remained at its “weakest level in decades.”

The IMF said that the US is positioned to experience the fastest growth rate, and robust expansions are also probable in emerging Asian economies due to robust artificial intelligence-related investments. 

“Projected slowdowns in the largest emerging market and developing economies imply a longer path to close the income gaps between poor and rich countries. Having growth stuck in low gear could also further exacerbate income inequality within economies,” the IMF said.

Inflation may still get worse, says billionaire 

“The playbook to get out of this is that you inflate your way out,” Jones said, pointing to Japan as an example of a country already pursuing this strategy.

“We’re going to be broke really quickly unless we get serious about dealing with our spending issues.”