IMF forecasts slowdown in inflation and ‘tough time’ for finance authorities

“We expect headline inflation to fall from more than 9 percent last year to 4.8 percent in 2024,” IMF Managing Director Kristalina Georgieva said at the APEC Leaders’ meeting in San Francisco, Report informs.

“Core inflation is still dragging behind, and the conclusion is that unfortunately, we have to brace for interest rates remaining higher for longer. Likely through 2024 and maybe up to 2025.

So, what does that translate into in terms of policies? Where inflation is still behind target, central banks need to continue to be vigilant and communicate based on data their intentions for the future.

It is very important to recognize that it is going to be tough time for finance authorities practically, almost everywhere. They need to rebuild buffers for future shocks while at the same time paying for higher interest rates when servicing debt, supporting vulnerable populations, and funding the green and digital transformations,” she said.

According to Georgieva, the world is in a moment in history of resilience, but also risks:

“On the point of resilience, growth in the U.S. exceeded expectations in the third quarter and while momentum may be slowing a bit, inflation is still falling and labor markets are still very strong. Last week we upgraded our projections for China. This adds to positive growth momentum in Asia, especially in ASEAN. And what is good for these two big engines of the world economy, for the US and for China, is good for the rest of the world.”

“But we also witnessed the eruption of the Israel-Gaza conflict and the tragic loss of civilian life in Israel and now in Gaza. Economically, this is devastating for the countries at the epicenter of this conflict. It is also very risky for their immediate neighbors – Lebanon, Jordan, Egypt,” the IMF managing director stressed.