Global inflation rate decrease to 3.5 percent in 2025

By Alimat Aliyeva

In its latest upbeat report on the state of the global economy, the International Monetary Fund (IMF) predicts that inflation will drop markedly to 3.5 percent by the end of 2025 from a peak of 9.4 percent in the third quarter of 2022. But Pierre-Olivier Gurinsha, director of research at the IMF, stresses the need for a coordinated "triple policy cycle" to increase resilience in a changing economic environment and warns of continuing risks amid geopolitical tensions. Despite the encouraging facts contained in the report, supply chain disruption is presented as a major negative factor, Azernews reports.

Pierre-Olivier Gurinsha said at a press conference that the downward trend in inflation is supported by the elimination of supply and demand tensions, as well as an increase in the supply of labor.

According to the IMF representative, although there are signs of economic recovery in a number of rich countries, it is predicted that the United States will enter the stage of economic "cooling off". China's growth forecast for 2024 dropped slightly to 4.8 percent. Meanwhile, lower-income countries are experiencing sharper downward trends, mainly due to climate shocks that undermine economic stability and ongoing conflicts.

The Fund believes that the global inflation rate will be 5.8 percent in 2024 and will decrease to 3.5 percent in 2025. Inflation in advanced economies is projected to fall to 2 percent and stabilize at about 2 percent in 2025. The inflation rate in developing countries will decrease from 8.1 percent in 2023 to 7.9 percent in 2024 and 5.9 percent in 2025.

Moreover, the report shows a decrease in overall inflation, which will help significantly reduce global inflation by 2025. This change may be due to low fuel prices. At the same time, tight monetary policy is expected to reduce inflation next year.