Global economic growth will hold steady in 2024-25, but protectionist trends and supply chain risks are holding back growth prospects in the longer term, the IMF said today.
The IMF's updated World Economic Outlook, released today, forecasts global growth of 3.2pc both in 2024 and 2025. IMF forecasts are used by many economists, including at the IEA, to model oil demand projections.
But an "escalation in regional conflicts, especially in the Middle East, could pose serious risks for commodity markets," IMF director of research Pierre-Olivier Gourinchas said.
While the IMF does not directly address the outcome of the US presidential election, former president Donald Trump has said he would impose tariffs of up to 20pc on US imports from all countries, and even higher for imports from China.
"Shifts toward undesirable trade and industrial policies can significantly lower output relative to our baseline forecast," Gourinchas said.
An IMF forecast scenario that involves a trade war between the US, Europe and China would reduce the US GDP annual growth forecast by 0.5 percentage points in 2025-30, with smaller effects in the eurozone and China. The effects of trade policy uncertainty on manufacturing would present an additional drag on growth in all countries involved.
The baseline scenario in the IMF report forecasts US GDP growth at 2.8pc this year, an upward revision from the previous forecast issued in July. The IMF revised down its China GDP growth forecast slightly to 4.8pc this year.
The IMF has warned for some time that the lackluster medium-term global economic growth and high levels of sovereign debt in major global economies would reduce public investment capacity, including in funding the energy transition.
By Haik Gugarats
