In its latest economic forecast, the International Monetary Fund (IMF) said it expects the global economy to grow by 3.2% in 2025. This expectation remains unchanged from 2024.
Analysts described global economic activity next year as “steady but unimpressive.” They also noted that while the economy could have a soft landing as central banks keep inflation under control, the world still faces a growing number of threats:
“The balance of risks is tilted to the downside as geopolitical tensions could flare up; problems in China’s real estate sector could impact global trade, as well as rising protectionism and continued geo-economic fragmentation.
In addition, disruptions to the disinflationary process could deter central banks from loosening monetary policy, posing additional challenges to fiscal policy and financial stability. Amid multiple threats, it is time for a policy shift,” the IMF said in a report on Tuesday.
Analysts noted that despite the dip in gold prices, the market remains well supported. The IMF warnings have added another factor to boost investment demand.
December gold futures were trading at $2,754.70 an ounce, up 0.58% on the day.
While not mentioning any specific countries, the IMF also pointed out that protectionist governments could pose a threat to global growth next year.
“Increasing protectionist policies will exacerbate trade tensions, reduce market efficiency and further disrupt supply chains,” analysts said.
Elsewhere, the IMF forecasts the US economy will grow 2.2% next year, down from 2.8% in 2024. Notably, Canada is expected to be among the world's top economic performers next year. The IMF forecasts Canada's economy will grow 2.4%, up from an expected 1.3% this year.
The European economy is expected to grow 1.2% next year, up from 0.3% growth in 2024.
The UK economy is expected to grow by 1.5% in 2025, up from the 1.1% expected this year.
Last week, IMF economists warned that global public debt was “on an unsustainable path.” They reiterated in the report that steps were needed to rein in spending.
“In many countries, fiscal policy changes are urgently needed to get public debt on track and rebuild fiscal buffers; the pace of adjustment must be tailored to country-specific circumstances,” the IMF said.
