IMF raises 2025 growth forecast

Business & Economy

The Big Story

IMF sounds death knell over inflation, raises 2025 outlook

International Monetary Fund (IMF) officials are declaring victory in the post-pandemic inflation fight and have raised projections for U.S. economic performance.

The IMF sees real gross domestic product (GDP) increasing by 2.8 percent this year, up from a forecast of 2.6 percent made in July. For 2025, the IMF expects growth of 2.2 percent, up from an earlier expectation of 1.9 percent.

“In most countries, inflation is now hovering close to central bank targets,” IMF research director Pierre-Olivier Gourinchas said at a press conference Tuesday.

Gourinchas attributed easing inflation more to transitory economic factors — namely the renormalization of supply and the absorption of economic rescue measures — than to the Fed’s interest rate hikes, but said that monetary policy helped to keep price expectations anchored.

“The decline in inflation without a global recession is a major achievement,” he said. “Much of that disinflation can be attributed to the unwinding of the unique combination of supply and demand shocks that caused the inflation in the first place, together with improvements in labor supply due to immigration.”

The IMF sees the trend of lower inflation continuing, particularly with regard to production and services prices, as opposed to the more volatile commodity prices.

The international lender also warned of slower global growth in coming years, pointing to issues with the Chinese property market, demographic changes, lower cross-border investment and various fiscal policies at the national level. Wars and geopolitical instability were also a top concern.

The Hill's Tobias Burns has more here.

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