The International Monetary Fund (IMF) has projected global growth to be 3.3% this year and next, a steady rate but well below the historic average. This projection comes in the context of high public debt levels and widening divergences across economies.
At the first meeting of the G20 Finance Ministers and Central Bank Governors in Cape Town, South Africa, IMF Managing Director Kristalina Georgieva thanked the South African government for hosting the event and commended Minister Godongwana and Governor Kganyago for their leadership in addressing global economic challenges.
Georgieva noted that growth in the United States remains strong, while the European Union is experiencing a more gradual pickup than previously expected.
In emerging markets and developing economies, growth in 2025 is expected to match last year’s performance.
The global disinflation process continues, with labor markets gradually cooling and energy prices projected to decline further. Headline inflation is expected to continue its trajectory toward central bank targets.
However, economic policy uncertainty remains high. Governments worldwide are shifting policy priorities, with significant changes in the United States in areas such as trade policy, taxation, public spending, immigration, and deregulation.
Other countries are also adjusting their policies, making it complex to assess the combined impacts of these changes, which will become clearer in the coming months.
Risks are diverging, with some short-term upside potential in the U.S., where positive sentiment could boost activity.
However, overall risks are to the downside for most other economies, including the risk of policy-induced disruptions to the disinflation process or capital outflows from emerging markets.
Georgieva emphasized the need for cooperative actions to boost growth. While domestic reforms are essential, many countries require external support to implement reforms through capacity development and concessional external support, as well as actions to attract more private inflows.
Addressing debt challenges is also urgent. Some countries may need to restructure their debt, while others face high interest payments and refinancing needs that hinder their ability to invest in their future.
Improving the predictability and timeliness of restructuring processes, building on significant progress under the Common Framework, is crucial.
Support is also needed for countries with sustainable debt but elevated interest payments, which crowd out their capacity to invest in education, health, or infrastructure.
The IMF plays a vital role in maintaining or restoring macroeconomic stability through policy advice, capacity development, and relevant lending.
The organization will continue to lead on debt issues through debt sustainability analyses and support for international efforts to address debt challenges, including the Global Sovereign Debt Roundtable.
“We remain committed to helping our member countries achieve greater prosperity and stability,” Georgieva said.
