Page 4 - Market Outlook Q3 2024

www.ntda.org
4

Economic Overview

International Monetary Fund Issues Economic Outlook
Including Warnings on Policy Pivot, Rising Threats

Global inflation is declining significantly, with projections that inflation Fiscal policy adjustments are also critical to stabilize public debt,
will fall to around 3.5% by the end of 2025. This marks a substantial particularly given the high post-pandemic interest rates. Countries are
improvement from the 9.4% peak in 2022. The global economy has encouraged to take gradual, credible steps to rebuild fiscal stability,
shown resilience during this period, maintaining stable growth rates balancing budget adjustments with economic growth. Meanwhile,
around 3.2% despite synchronized monetary tightening. However, structural reforms — especially in productivity and innovation — are
downside risks remain — regional conflicts, prolonged high interest essential to address growth challenges like aging populations and
rates, potential market volatility, and economic challenges in China — climate change. These reforms require strong public support, which
all pose ongoing threats to global economic stability. means prioritizing transparency, trust, and compensatory measures to
improve their social acceptance.
Inflation’s decline reflects both a retreat from the supply-demand shocks
of the pandemic and tighter monetary policy, which anchored inflation Global growth remains subdued, with forecasts of 3.2% for 2024 and
expectations and prevented wage-price spirals. However, the focus now 2025. Emerging markets, particularly in Asia, have shown resilience
shifts to three “policy pivots”: 1) a cautious easing of monetary policy, 2) due to AI-driven investments. However, other regions are facing more
strengthening fiscal discipline, and 3) implementing structural reforms significant challenges due to geopolitical tensions and economic
to boost long-term growth. Central banks have started cutting interest constraints. Although inflation is returning to target levels, the path
rates, which is expected to support economic activity, particularly in remains precarious due to sector-specific pressures, especially in
advanced economies with weaker labor markets. Still, challenges like services. Balancing fiscal and monetary policy amid these uncertainties
high service inflation and supply disruptions could complicate this will be critical to supporting stable, long-term growth across global
easing. economies.