Experts of the International Monetary Fund ( IMF) forecast a significant decline in core global inflation in 2025 to 3.5%. This is said in the blog of the chief economist of the IMF, Pierre-Olivier Guerinci.
„Let's start with the good news: the global battle against inflation appears to be largely won, although price pressures remain in some countries. After peaking at 9.4% in the third quarter of 2022, we forecast core inflation to fall to 3.5% by the end of next year, slightly below the two-decade average before the pandemic,” Gurinsha noted in connection with the publication of the IMF Report on the prospects for the development of the world economy within the autumn session of the governing bodies of the fund and the World Bank.
Furthermore, in most countries, inflation is already within the central banks' target range, opening the way for authorities to ease monetary policy. The fund's chief economist called it a "major achievement to reduce inflation without a global recession". He estimates that “the sharp rise and subsequent decline in inflation reflects a unique combination of shocks: widespread supply disruptions combined with strong post-pandemic demand pressures, followed by a surge in commodity prices caused by the war in Ukraine.“< /span>
Inflation in advanced economies is expected to fall faster, by 2 percentage points, from 2023 to 2024 and stabilize at around 2% in 2025 than in emerging market economies , for which inflation is expected to fall from 8.1% in 2023 to 7.9% in 2024 and then fall at a faster pace in 2025 to 5.9%. "Inflation in emerging Asia is forecast to be on par with advanced economy inflation - 2.1% in 2024 and 2.7% in 2025 - thanks in part to early monetary tightening and price controls in many countries in the region . In contrast, inflation forecasts for emerging Europe and developing countries in the Middle East and North Africa and Sub-Saharan Africa remain in double digits due to large differences in the pass-through of currency depreciation and administrative price adjustments (Egypt) and low performance in agriculture (Ethiopia)”, according to the financial institution.
Experts include the effects of monetary policy tightening as factors contributing to lower core inflation. Overall, inflation is expected to return to target in most cases by 2025.
But amid falling inflation, the fund forecasts that global trade growth will average 3.25% in 2024 and 2025 after a period of near-total stagnation in 2023. “Despite the increase of international restrictions affecting trade between geopolitically distant blocs, the ratio of world trade to GDP is expected to remain stable”, the report noted.