At the International Monetary Fund’s recent meeting in New York, Pierre-Olivier Gourinchas, an esteemed economist at the institution, expressed optimism regarding the global economic outlook.
Despite ongoing geopolitical tensions, the IMF slightly revised its global growth forecast for 2024 and maintains the same projection for 2025, now at 3.2%.
Gourinchas emphasized the resilience of the global economy, stating that the risk of a global recession remains minimal.
He highlighted positive indicators, including robust economic performance in the U.S. and emerging markets, as well as a quicker-than-expected decline in inflation, despite slower growth in Europe.
However, Gourinchas noted a divergence in growth forecasts within Europe, with the IMF revising downward projections for Germany, France, and Italy while raising them for Spain, Portugal, Belgium, and the U.K.
The economist also warned about the potential impact of persistently high oil prices and disruptions in shipments between Asia and Europe, which could fuel inflation further and prompt central banks to maintain higher interest rates, thus weighing on global growth.
According to the IMF’s analysis, a sustained 15% increase in oil prices in 2024 could raise global inflation by about 0.7%. Despite recent stability in oil prices amidst tensions between Israel and Iran, Gourinchas underscored the ongoing geopolitical risks.
Gita Gopinath, the IMF’s deputy managing director, echoed concerns about geopolitical risks, particularly those stemming from the Middle East.
While acknowledging that the situation has been managed thus far without significant spillovers, she emphasized the potential implications for oil prices if conflicts escalate, posing substantial risks to the global economy.
