The global economy is neutral, and the International Monetary Fund (IMF) warns of bumpy roads ahead.

In its latest World Economic Outlook, “Policy Pivot, Rising Threats,” the IMF says growth will hold steady at 3.2% in 2024 and 2025—but that’s hardly cause for celebration.

Global growth is slowing compared to pre-pandemic levels. Emerging markets like Asia benefit from solid investments in AI and tech, but regions like Sub-Saharan Africa and the Middle East face challenges.

Conflict disrupted commodities, and extreme weather is dragging many economies down.

The U.S. Forecast boosted the U.S. economy while Europe’s largest economies saw downgrades. Long-term projections show growth at 3.1%, with aging populations and weak productivity holding back progress.

Inflation is falling globally, expected to drop from 6.7% in 2023 to 4.3% by 2025. But the picture could be more balanced.

Goods prices are stabilizing, yet services inflation remains stubbornly high, particularly in advanced economies.

Emerging markets are also dealing with inflation spikes caused by rising food prices.

Oil prices are projected to hover around $81 a barrel in 2024, but energy markets remain vulnerable to geopolitical shocks.

Meanwhile, natural gas and coal prices are dropping, relieving consumers.

The IMF calls for three critical policy pivots to address these challenges. Central banks must carefully ease monetary tightening as inflation cools.

Governments must stabilize public debt, especially in countries like the U.S., where debt is expected to hit 134% of GDP by 2029. Bold structural reforms are also needed to boost productivity, but public resistance makes this a tough task.

Risks are rising on all fronts. Geopolitical conflicts, particularly in Ukraine and the Middle East, create instability.

Financial markets remain volatile, and some emerging markets face significant external debt pressures. A slowdown in China’s property sector could ripple across the global economy.

Global trade remains stable for now, but trade within geopolitical blocs is increasing, while trade between blocs is shrinking. This fragmentation risks weakening global supply chains and slowing innovation.

Labour markets are starting to cool, with wage growth showing signs of moderating.

Manufacturing is shifting toward emerging markets like China and India, while advanced economies lean more on services, reshaping the economic landscape.

The IMF also highlighted challenges in the global green energy transition.

Geopolitical fragmentation drives costs, and vulnerable countries struggle for more robust international support to make necessary changes.