The International Monetary Fund (IMF) forecasts a modest increase in global economic growth this year, with inflation expected to continue falling. However, the IMF cautions that President-elect Donald Trump's proposed policies, such as tax cuts, tariffs, and deregulation, could lead to higher inflation in the near term.
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The Washington-based lending agency expects the world economy to grow 3.3% this year and next, up from 3.2% in 2024. The growth is steady but unimpressive: From 2000 to 2019, the world economy grew faster – an average of 3.7% a year. The sluggish growth reflects the lingering effects of big global shocks, including the COVID-19 pandemic and Russia's invasion of Ukraine.
But in a blog post that accompanied the release of the IMF’s latest World Economic Outlook report, the fund’s chief economist, Pierre-Olivier Gourinchas, wrote that the policies Trump has promised to introduce “are likely to push inflation higher in the near term.’’ Gourinchas also wrote that Trump’s plans to slash regulations on business could “boost potential growth in the medium term if they remove red tape and stimulate innovation.’’ But he warned that “excessive deregulation could also weaken financial safeguards and increase financial vulnerabilities, putting the U.S. economy on a dangerous boom-bust path.’’. The IMF expects U.S. growth to come in at 2.7% this year, a hefty half percentage point upgrade from the 2.2% it had forecast in October.
GLOBAL ECONOMY INFLATION IMF DONALD TRUMP ECONOMIC POLICIES
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