AS countries across the globe take added steps to prioritise inflation targeting, the International Monetary Fund (IMF) has said the indictors so far continue to point to a soft landing, with global growth holding steady though some risks remain.

Following the release of its latest edition of the World Economic Outlook (WEO), IMF has projected global growth this year to remain at 3.2 per cent, with median headline inflation declining from 2.8 per cent at the end of 2024 to 2.4 per cent at the end of 2025.

Global growth at the end of 2022 stood at 2.3 per cent, shortly after the median headline inflation peaked at 9.4 per cent.

Chief economist and director in IMF’s research department Pierre-Olivier Gourinchas said that despite gloomy predictions, “the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose” .

“Global growth was 3.2 per cent in 2023 and is expected to remain at that level, both in 2024 and 2025. This represents a 0.3 percentage point upgrade from our October projections for 2024, with stronger activity for the US, China, and other large emerging markets but weaker activity in the Euro area,” Gourinchas said in his report at the start of the IMF Spring Meetings on Tuesday.

In estimating less economic scarring over the last four years the chief economist said these could, however, be more taxing for low-income developing countries, “many of which are still struggling to turn the page from the pandemic and cost of living crises”.

Pointing to downside risks such as new price spikes owing to political tensions, persistent core inflation, or disruptive turns in fiscal adjustments, these, he noted, could slow activity. On the upside though, he believes faster disinflation or timely structural reforms could boost activity and augur well for economies.

“Inflation trends are encouraging but we are not there yet. Somewhat worryingly, progress toward inflation targets has somewhat stalled since the beginning of the year in some countries — and this could be a temporary setback — but there are reasons to remain vigilant,” Gourinchas stated.

As economies continue to be pressed by rising oil prices in the wake of extended political tensions further compounded by stubbornly high services inflation in some countries and trade restrictions threatening to push up the price of goods on the other hand, the chief economist recommended that bringing inflation back to target should remain the number one priority. To this end he calls for central banks to carefully calibrate the pivot towards monetary easing.

“Going forward, policymakers should prioritise measures that help to preserve or even help to enhance the resilience of the global economy. A key priority is to rebuild fiscal buffers, especially in an environment with high real interest rates, modest growth, and elevated debts. Unfortunately, planned fiscal adjustments are often insufficient and could be derailed further, given the record number of elections this year,” Gourinchas said.

Outlining some other policy considerations which call for improved human capital development; faster and more efficient resource allocation; structural reforms to promote domestic and foreign direct investment; along with the strengthening of monetary, fiscal and financial policy frameworks — especially for emerging market economies and green transition investments — he said these will all be needed to preserve the hard-won improvements.