Transcript

Transcript of April 2024 World Economic Outlook Press Briefing

April 16, 2024

Moderator: Jose Luis De Haro, IMF Communications Department

Pierre‑Olivier Gourinchas, Director, IMF Research Department

Petya Koeva Brooks, Deputy Director, IMF Research Department

Daniel Leigh, Division Chief, IMF Research Department

Mr. De Haro: We can start. I want to welcome everyone, good morning. Also hello to those who are joining us online. I am Jose Luis De Haro with the Communications Department here at the IMF. We are gathered here today to introduce the latest edition of the World Economic Outlook. If you have not got a copy yet, I would recommend you go to IMF.org. There you will find the flagship. Then also there is a blog and data underlining some charts and many other assets that might be helpful for your reporting.

And what best to discuss the World Economic Outlook than to be here today with Pierre‑Olivier Gourinchas. He is the Economic Counsellor and the Director of the Research Department. Also next to him are Petya Koeva Brooks, Deputy Director, and Daniel Leigh, Division Chief, also with Research Department.

Pierre‑Olivier is going to start with some opening remarks, and then we are going to proceed to take your questions. I want to remind everyone that this briefing is on the record and that we also have simultaneous interpretation. With that, Pierre‑Olivier, the floor is yours.

Mr. Gourinchas: Thank you, Jose. Good morning, everyone. The global economy continues to display remarkable resilience with growth holding steady and inflation declining, but many challenges still lie ahead. Global growth was 3.2 percent 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 objections for 2024, with stronger activity than expected in the U.S., China, and other large emerging markets, but weaker activity in the Euro Area.

Inflation continues to come down. Median inflation will decline from 4 percent at the end of last year to 2.8 percent by the end of this year and 2.4 percent at the end of 2025, and most indicators continue to point to a soft landing.

A resilient growth and rapid disinflation are consistent with favorable supply developments, including the fading of energy price shocks and a striking rebound in labor supply, supported by strong immigration in many advanced economies.

We also project less economic scarring from the crisis of the past 4 years, although estimates vary across countries. The U.S. economy has already surged past its pre‑pandemic trend, but we now estimate there will be more scarring for low‑income developing countries, many of which are still struggling to turn the page from the pandemic and cost‑of‑living crisis.

Risks are now broadly balanced. On the downside, new price spikes from geopolitical tensions, persistent core inflation, or a disruptive turn towards a fiscal adjustment could slow activity. On the upside, faster disinflation or timely structural reforms that boost productivity could support activity. Insufficient action on the fiscal front could also stimulate growth, although this could force a more costlier adjustment later on.

Inflation trends are encouraging, but we are not there yet. Somewhat worryingly, progress towards inflation targets has stalled since the beginning of the year in some countries. This could be a temporary setback, but there are reasons to remain vigilant. Oil prices have been rising in part due to geopolitical tensions and services inflation remains stubbornly high in many countries. Further trade restrictions could also push up goods inflation. Bringing inflation back to target should remain the priority. There are stark divergences also between countries that call for careful calibration of monetary policy. The strong recent performance of the United States reflects robust productivity growth and growth in labor supply, but also strong demand pressures that could add to inflation. This calls for a cautious and gradual approach to easing by the Federal Reserve.

By contrast, growth in the Euro Area will rebound this year but from very low levels. Unlike in the United States, there is little evidence of a hot economy, and the European Central Bank will need to carefully calibrate the pivot towards monetary easing.

China’s economy remains affected by the downturn in its property sector. Domestic demand will remain lackluster unless strong measures address the root cause and monetary policy can afford to be more accommodative.

Going forward, policymakers should prioritize measures that help preserve or even 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.

In the United States, the fiscal stance is out of line with long‑term fiscal sustainability. This raises short‑term risks to the disinflation process, as well as longer‑term fiscal and financial stability risks for the global economy. Fiscal consolidations are never easy, but it is best not to wait until market dictate their conditions.

Credible fiscal consolidations can help lower funding costs, improve fiscal headroom and financial stability. The key is to start early, gradually, and credibly. This will also pave the way for further monetary policy easing to support activity.

The second priority is to reverse the decline in medium‑term growth for low‑income countries. Structural reforms should promote domestic and foreign investment and increase fiscal revenues. This will help lower borrowing costs and reduce funding needs. These countries must also improve the human capital of their large, young populations, especially as the rest of the world is aging rapidly.

Artificial intelligence also gives hope for boosting productivity. It may do so, but the potential for serious disruptions in labor and financial markets is high, and the right infrastructure and regulations are needed.

Third, global growth prospects are also harmed by rising geo‑economic fragmentation. Trade linkages are already changing. Some economies could benefit from the reconfiguration of global supply chains, but the net effect may still be a loss of efficiency, making the global economy less, not more resilient, and the broader damage is to global cooperation.

A great achievement of the past few years has been the strengthening of monetary, fiscal, and financial policy frameworks, especially for emerging market economies. This has helped make the global financial system more resilient and avoid a permanent resurgence in inflation. Going forward, it is essential to preserve these improvements, and that includes protecting the hard‑won independence of central banks.

Lastly, the green transition requires major investments. Cutting emissions is compatible with growth, but emissions are still rising, so more needs to be done and done quickly. This will require technology transfers by other advanced economies and China to weather emerging and developing economies, as well as substantial private and public financing.

On these questions, as well as many others, multilateral frameworks and cooperation remain essential for progress. Thank you. 

Mr. De Haro: Thank you, Pierre‑Olivier. Before we open the floor to your questions, some ground rules. If you have a question, please raise your hand and wait until I call you. If I do, please identify yourself and the outlet you represent. We will be taking questions also online and via WebEx. I want to remind everyone that we are here to discuss the World Economic Outlook. If you have questions regarding country programs, negotiations, there is going to be plenty of regional press briefings later on in the week where you can tackle these issues. We are going to start here on the second row.           

Question: David Lawder with Reuters News Service here in Washington. Pierre‑Olivier, can you go a little bit deeper into the scarring that is happening with low‑income developing economies? You said many of these are having a hard time sort of recovering after the various crises that they have been through. How is this being manifested? Which countries are having the worst time of it? Also, if you could comment a bit on the energy price outlook. The United States is looking at potentially new sanctions against Iran after its attack on Israel. That is likely to come in the oil sector. If we do see spikes in prices, what does that mean for inflation globally and the recovery? Thank you.

Mr. Gourinchas: Thanks, David. Yes, as I mentioned, estimates of scarring, which is the amount of decline in output relative to our pre‑pandemic, say January 2020 estimates, have been reduced for most regions and countries, but they have been increased for low‑income developing countries. Another thing we have noticed over the recent estimates and recent run of projections is also inflation and price pressures have been revised up, so what we are seeing for that region is a combination of still impacts in terms of output and also prices that remain quite strong, price pressures that remain quite strong.

What is going on here is we are seeing a combination of the effect of relatively high energy and food prices, increased food insecurity in countries in the region that is affecting outcomes. This is a region that is also—had limited—more limited fiscal buffers during the pandemic and the cost‑of‑living crisis to protect its population, and we see the remaining effect of this going on. We are in an environment in which interest rates are rising. There are fiscal pressures and so there is limited space for a lot of these countries to address this among low‑income and developing economies.

Now, in terms of potential output for energy price and what it might do to the global economy, this is something that we explored in our report. We looked at a scenario where we would have more geopolitical tensions that would result in elevated oil prices and energy prices and shipping costs. And what we find is that this would lead to higher price pressures in the global economy that would be higher inflation, there would be lower output. And roughly the estimates we have for a sustained increase in oil prices by about 15 percent would be an increase in inflation globally of about 0.7 percent. So there is some effect there. We are not in that scenario right now. Our assessment of what has been happened with the tensions in the Middle East is there has been some increase in oil prices, but it is too early to say whether that would be sustained, and it is not in our baseline, but we certainly looked at the scenario very carefully.           

Mr. De Haro: Let us go there.              

Question: Hello. This is Noor with Bloomberg Asharq. We have a question now. You touched upon the rising inflation again. So interest rates are already really high. How do you see central banks dealing with this, specifically the Fed, especially that now the probability of any decrease in interest rates in June is basically declining?

Mr. Gourinchas: This is one of the divergences we highlight in our report. We are saying that indeed the drivers of the inflation in countries like the United States are somewhat different than they are in other regions in the world, especially if you look at the Euro Area or the U.K. or Japan. There is evidence, which we document in our report, that tight labor markets, strong demand are playing a role in the U.S. And if that were to be reinforced, then the recent inflation print numbers in the U.S. seem to point in that direction, although we have to take that with a grain of salt. There is a lot of volatility in the month‑to‑month inflation numbers. Then I would probably call for a delayed easing of monetary policy in the U.S.

At the same time, I want to say that we would still expect the U.S. to be in a position where it starts easing sometime in 2024. The progress has been enormous in terms of disinflation and the resilience of the economy. What we are seeing now is maybe a slight adjustment in terms of the baseline.        

Mr. De Haro: OK. We are going to go here in the first row and then we will go back. 

Question: Yes. Thank you very much for the opportunity. So, China’s Q1 GDP number just came in at 5.3 percent, which was just released last night. So, how does that number look to you and given all‑year target, 5 percent, in the setback in the China government, so does that first quarter GDP number give you more confidence that we can reach the—hit the target for the whole year?  

Also, in your remarks, you mentioned that China’s domestic demand will remain lackluster for quite some time. So strong measures and reforms just the root cause, so can you elaborate? What do you mean by the strong measures and the reforms? Thank you very much.

Mr. De Haro: Before we answer the question, we also have a question on WebEx on China, please, the reporter that wants to come in on WebEx. Weier.

Question: This is question from ETIME Media Group. In the context of the green transition, how should global cooperation be instructed and what role can China play in this collaborative effort? Additionally, at the last WEO release, you noted that globalization is plateauing. Have there been any changes in this trend and what impact might this have on global cooperation to address the climate change? Thank you.

Mr. De Haro: So, we can go with the GDP numbers and then we can go with the climate one.

Mr. Gourinchas: Yes, happy to. First, yes, last night, it was released that China’s GDP year‑on‑year for the first quarter was 5.3 percent. This is higher than the estimates. This is certainly higher also than the estimates we had here at the Fund. So the team will be assessing how they are revising their growth projections for the annual numbers, and it might be revised upwards. But I would like to emphasize some of the—some of the structural forces that are driving the Chinese economy right now. And certainly one of the important ones is the weakness in the property sector. And in our forecast for this year, our forecast was unchanged from January at 4.6 percent. There were two balancing forces. One was stronger stimulus that was coming from the Chinese government with measures that were announced as recently last month, in March, but then the continued weakness in the property sector and the two in our assessment were balancing each other out and leading to an unchanged forecast. Now we will have to see whether that is revised.

But the underlying weakness in the property sector is still there, and some of the indicators that we have and that were released even in the last few days do seem to point out that that weakness will persist. So when we are referring to reform measures that would be needed, those would be measures that would directly address some of the root cause in the weakness in the property sector, and that includes dealing with property developers that are struggling right now and recapitalizing or winding them down, then finding ways in which also there might be ways to sustain domestic consumption for China in the medium to long term, and that includes maybe building stronger safety nets.

The broader context here, and that allows me to answer the second question on China, is that with an economy that has potentially still relatively weak domestic demand but is growing, then there would be an increased reliance on the export sector. And that is something that in the context of very tight trade tensions could be complicated. So certainly that would be in the interest of the Chinese economy to develop ways of sustaining domestic demand. Let me turn to Daniel to see if there are any other points on China.

Mr. Leigh: I would just add that the green transition and the high-tech sectors present a great opportunity for China and policies like evening the playing field between state‑owned and private enterprises are going to help China capitalized on this great potential.

Mr. De Haro: OK. We are going to the third row. It is the third row. Yes, there.

Question: Larry Elliott of the Guardian. I just wonder whether you could say a bit more about the tensions in the Middle East. The world economy has been hit by a number of shocks in recent years, including the war in Ukraine. Is there a risk that the conflict between Israel and Iran could be the next [malign] in the global economy? Maybe you could unpack a bit more how you think it would impact on the global economy, not just through oil prices, but through business and consumer confidence.

Mr. Gourinchas: Yes. Certainly we watch the developments happening in that space, and we try to adjust our scenarios and our analysis based on that, so as I mentioned earlier, the way we approach this is by evaluating different possible trajectories for the global economy. The one that we describe in detail in our report is one where you would have fairly significant disruptions in oil markets that will lead to a 15 percent increase in oil prices and also an increase in shipping costs.

So, of course, one could think about more adverse scenarios than that, but I think that is something that we have not really contemplated just yet. The impact, to unpack a little bit the channels here, you are right, there would be an impact on business confidence. There would be an impact on investment, probably.

The increased inflation that would come from higher energy prices would trigger a response from central banks that would tighten interest rates in order to secure inflation coming back to target, and that would weigh down on activity, and that would do so in the context in which in some countries activity in growth is already fairly weak, and so that might also have a strong effect there.

Mr. De Haro: OK. First row there.              

Question: Thank you very much. Joel Hills from ITV News. I wanted to pick up, Pierre‑Olivier, on some of the comments you were making about prioritization of rebuilding buffers, consolidation you say is never easy, but it is important that it is early gradual and credible. Sort of within that context, are you comfortable with the British approach of cutting taxes on an assumption, I suppose of future unspecified cuts to public spending?

Mr. De Haro: There is another question online from Holly Williams, Press Association, that says was it responsible for the U.K. chancellor to cut taxes in the latest budget when inflation is still above target, and it risks putting more pressure on price rises? 

Mr. Gourinchas: What we emphasize in our report is a number of countries need to do—many of the countries in the world that have deployed fiscal buffers during the pandemic and the cost‑of‑living crisis have seen their debt‑to‑GDP increase substantially. Now, some of that has come down a little bit. This is the effect of unexpected inflation, if you want, but if you look at the trajectory, it is starting to grow again in many countries. And so we are calling for rebuilding these buffers, which is absolutely necessary to be able to deal with the kind of shocks that might be larger in magnitude and might be the—there might be more than one and the same time. We seem to be living in this shock‑prone world. Having that fiscal capacity is important. That is true for the U.K., but that is true for many other countries. That is true for many—chiefly this is true for the United States, this is true for many European economies, this is true for many countries around the world. So this is a general assessment that it is very important to do that. We see very clearly that those country that had the fiscal room to protect households and businesses during these two crises were able to do much better and were able to rebound much more quickly. So it is a time now that these crises are behind us, at least both of these crises are behind us, but we could be facing future crises and they could be coming to be prepared.       

Mr. De Haro: We will take a question from WebEx and then go back to the room. Be patient. We will take more questions do not worry.

We have a question from Siram. Please go ahead. Hello. Can you here us?                     

Question: You projected a 6.8 percent and 6.5 percent growth rate for India over the last 2 years. Could you please elaborate on your policy recommendations for India? Specifically, could you comment on the employment situation there and other pressures to these growth numbers, such as net financial assets for those and private consumption which has been impacted by food inflation for many? Thank you.   

Mr. De Haro: We have another question, similar question on India from the Economic Times on the press center that says, you have raised India’s growth forecast for 2024. What are the upsides and downside risks to this 6.8 percent number? How will the geopolitical tensions in the Middle East affect growth and inflation forecasts?

Mr. Gourinchas: Yes, thank you. Indeed, India is one of the strong performers. We had a fairly sharp revision in the Fiscal Year 2023 to 2024, the one that is ending, and that has just ended. Then we have 0.3 percentage point upgrade for Fiscal Year 2024 to 2025. So India is doing quite well. Let me turn to Daniel to answer more specifically.

Mr. Leigh: [No audio]. Moderation partly reflects the tightening in monetary policy and the tightening in fiscal policy, which is necessary to bring inflation down. We see inflation coming down — is in the target range 4.6 this year, 4.2 next year. There are upside risks to this forecast. They could be further strengthened in private demand.

Also, an upside comes from the potential for reforms that would liberalize foreign investment and really boost exports and boost jobs and labor force participation. So it’s a very strong outlook, and there’s a balanced risk outlook.       

Mr. De Haro: Do we have any questions? We are going to the second row. 

Question: Hi. I am Daniel Avis, AFP. Just a quick question about Russia, if I may. Can you help us just to understand what is behind the very significant increase not only now but over the last few months to the IMF’s forecast for Russia? Thank you.   

Mr. De Haro: And I think we have another question on question on WebEx. Please come in. We cannot hear you. 

Question: Good morning. Anton with TASS Agency of Russia. Thank you so much for doing this. The same question.

The growth rate of the Russian economy is high into 2024, then similar figures on the Group of Seven countries that imposed sanctions against Russia. In this case, can we say that Russia was able to successfully overcome the sanctions restrictions? Thank you so much.             

Mr. De Haro: Yes.     

Mr. Gourinchas: Yes. So we have revised Russia’s GDP growth in 2024 by 0.6 percentage points, to 3.2 percent, so this is a significant upward revision. We are still expecting growth to decline in 2025, from 3.2 percent to 1.8 percent.

I will turn to my colleague Petya Koeva Brooks to provide additional details.   

Ms. Koeva Brooks: Thank you. So there are several factors behind the resilience of the Russian economy and the upgrades that we have made. I would mention four factors.

First, oil export volumes have held steady. The second part is that we have seen a lot of strength in corporate investment, including by state‑owned enterprises. The third is that we have also seen a lot of robustness in private consumption that has underpinned growth. And last, but not least, we have also had the impact from government spending; though there, we have seen much larger increases in security‑related spending than overall spending.

Now to put this in context, though, if we look into the medium term, there, we still have growth rates that are significantly below what they were prior to the war. Now we have growth rates in the order of one and a quarter, as opposed to 1.7, which we had previously, which is another way of saying that the Russian economy is still expected to face these headwinds as a result of the—again, the impact of the war and the associated sanctions. Thanks.

Mr. De Haro: We are going to go to the fourth row. Yep.

Question: Thank you. Susan Lynch from Politico. I have a question about the growth figures for Europe, the German economy, in particular, only going growing by 0.2 percent. What’s your analysis of that? And how concerned are you about the eurozone economy, in particular, particularly in comparison to the U.S.?

Mr. Gourinchas: So on the the euro economy, we have a region that has been feeling the full brunt of the energy crisis of the last 2022 and part of 2023 and is gradually emerging from that in the context of tight monetary policy. And so what we are seeing is a pickup in activity from 2023 to 2024. So growth in Germany, for instance, is very modest, 0.2 percent, but it’s higher than the negative growth in 2023. And the same is true at the level of the euro area, where we expect growth to grow from 0.4 percent in ‘23 to 0.8 percent in ‘24. And then as we go into 2025, we expect that monetary policy will start easing. So financial conditions will become easier, and also that the cost of living receding the purchasing power of households and workers will increase as real wages catch up. And that will also sustain demand. But we start from a position of relatively weak consumer sentiment, still tight monetary policy, and that’s still weighing down on growth in this year. Let me turn to Petya for additional comments on Germany and Europe.

Ms. Koeva Brooks: I don’t have much to add on Germany. For the euro area, some of the same factors are playing a role, although we do have quite a lot of heterogeneity within the euro area. So we do have upward revisions in other countries—for instance, Spain, Portugal, Belgium—that partially offset the downward revisions in Germany and France.

Mr. De Haro: We go to the first row here, and then we will move to this side. 

Question: Thank you. Two questions on Argentina. You foresee a sharp decline in inflation and a rebound of GDP. I was hoping, if you could elaborate, if you see the disinflation process on solid footing, first. 

Second, there’s a debate among economies, whether the recovery is going to be in L, V, or U shape. I was hoping you could pick a letter and tell us how and when the recovery, you see it happening. Thanks.

Mr. Gourinchas: So, on Argentina, I mean, the authorities are implementing a very ambitious stabilization plan to restore macroeconomic stability. And as you know, the plan is centered on a strong fiscal anchor that eliminates, in particular, any central bank financing of the government, which was one of the factors that was leading to very elevated inflation numbers under—in previous years. And so that is already showing its effects. We see this sharp decline in month‑on‑month inflation.

So the progress so far has been really impressive. The authorities have been able to record a fiscal surplus for the first time in over a decade. But, of course, this is going to take some time, and that’s going to require steadfast policy implementation. Much more needs to be done, and much more needs to be done on the broader scale. So I think this is—we are watching this situation closely. Our teams here at the Fund are in close contact with the authorities. But the progress, again, has been quite sharp. Now, whether that’s going to be a V, U, or L, let’s agree that we’d much prefer V over U over L.

Mr. De Haro: And with the alphabet, we are going to move toward this side of the room, the lady that —thank you.

Question: Hello. Ana Rodriguez. El Tiempo, Colombian Newspaper. In general, what the growth perspective for Latin America, not only for Argentina? And across the world, what is the—how do you see the oil markets in that region, please? Thank you. 

Mr. De Haro: Before we answer, there are two specific questions about the outlook on Mexico and Brazil. So if we could elaborate, too, that would be great.      

Mr. Gourinchas: So let me just give a few numbers and then turn it over to Petya.

The Latin American and Caribbean region, we see growth that has been—is going to slow down a little bit, from 2.7 percent to 2.5 percent. The numbers I give you here are excluding Argentina and Venezuela, which have fairly specific environments. And that is revised up in 2024 by 0.2 percentage points. So there is a lot of resilience in the region, as well; although, of course, a number of countries in the region have tight monetary policy—in fact, tight monetary policy that started ahead of what advanced economies did. And that is weighing down on growth and is expected to go away as we have some easing of monetary conditions. Petya. 

Ms. Koeva Brooks: Maybe a few words on Mexico and Brazil. Starting with Brazil, we are expecting growth to come down from 2.9 in ‘23 to 2.2 this year, and then to stay about the same at about the same rate, 2.1, in 2025. 

Now, last year, we saw a lot of strength due to record agricultural production. And this time around, we see moderation in that, as well as the—

We also have an upgrade in our forecast for this year as a result of the fiscal support, which is expected to be seen in the country.      

Now, when it comes to Mexico, we are expecting growth to come down to 2.4 this year, from 3.2 last year, and then going onto 2025 to be a 1.4. We have seen a strong recovery in the second half of 2023 due to a lot of internal demand, especially investment. And, of course, the strength of the U.S. economy and the close links of Mexico with that have also played a role. I will stop here. Thanks. 

Mr. De Haro: OK. We have 10 minutes. I am going to come back here. I know that you’ve been waiting very patiently. Let’s go to that side of the room, Bloomberg, and then we will end up here. I hope that we still have two, three questions left. So don’t worry. 

Question: Thank you, Pierre‑Olivier. Eric Martin with Bloomberg News.

I wanted to ask you about your commentary on the U.S. fiscal situation and the fiscal balance. In the report, it mentions larger‑than‑expected government spending, including what’s estimated — or comparison, excuse me, with prior WEO forecasts, 2 percent of GDP in the U.S. Can you talk a little bit about the conversations between the IMF and the U.S. in terms of what the U.S. should be pursuing in terms of fiscal policy and given the size of the U.S. economy—about a quarter of the world economy—how concerning this is for overheating around the world? 

Mr. Gourinchas: Yes. So there is, of course, the cyclical part, and there’s a more structural part. So let me start with the cyclical part. Here, what I would want to emphasize is the U.S. is expected to turn toward fiscal consolidation in 2024. In our projections, there is a 1.9 percent increase in the structural fiscal balance of the U.S. for 2024. And that is one of the reasons, among others, why we are expecting also growth to slow down in this year compared to last year and after that. So there is some movement in the right direction, if you want. 

But as for many other countries, we are concerned that this is, A, not enough and, B, more importantly, not necessarily sustained over a sufficient period of time, that it would bring back debt‑to‑GDP levels into a more comfortable zone. 

And the background here is that, even if we have an easing of monetary policy that is expected—our baseline is still that the Fed is going to cut policy rates sometime later this year—the funding costs for government debt may not be decreasing as much because of what is called the term premium, the risk premium on government debt has increased in recent times and may remain high in the context that debt levels are elevated and there are risks around that. So we are concerned that more of that medium‑term implication of the fiscal trajectory for the U.S. Daniel, anything to add? 

Mr. De Haro: Third row there. Nope. I will take both questions. You are first. 

Question: My name is Ivan. I work for AFP and the Africa Report. I have one question. This is going to be a very interesting year for Africa, especially about close to 19 countries are going for general elections. I want to know your projections, considering the fact that this usually comes with a lot of political violence in some areas, as well as sluggish growth that has affected the sub‑Saharan region. I want to know more about the recommendations you have for these African countries that are going for elections, especially in this period, and what you expect. Thank you. 

Mr. De Haro: Yeah. Let’s go first with this question and then we can— 

Mr. Gourinchas: I mean, 2024 is the biggest election year on record, and so the question of elections is important for many parts of the world, including Africa. And that is a concern especially in relation to what we just discussed, which is the fiscal trajectories that there is a risk there that there could be some fiscal slippage. 

For the sub‑Saharan Africa region, our growth number for 2024 is 3.8 percent. This is actually unchanged from our January projection, and it’s up from 3.4 percent in 2023. So there is a rebound in growth and activity, as the supply side improves and maybe as the negative effects of past weather shocks subside.

Daniel, anything to add? 

Mr. Leigh: After four years of quite—a lot of turmoil, this is the year where we really see a turnaround in investor appetite for Africa. We have had Côte d’Ivoire issuing the Eurobond, Benin, Kenya spreads easing. So this is going to ease some of the pressure on these economies. Also, as inflation starts to come down, inflation is coming down as those past shocks fade and also thanks to the tight policies that have been implemented. Of course, there’s a lot of risks around this scenario in the context of elections. There could be more spending in the short term that could provide a boost, but there are serious potential disruptions later on, if there’s an easing, as in other parts of the world, this is our assessment. 

Also, there’s the upside risk from further acceleration of reforms to help people get jobs and attract more foreign investment. 

Mr. De Haro: Allow me to remind you that there’s going to be regional press briefings going on later this week so we can continue tackling some of these issues. Go ahead and then we will have time for only one question, and we will have to end. 

Question: OK. Thank you very much. My name is Hope Moses from Business Day Nigeria. You raised Nigeria’s growth from 2.9 percent to 3.3 percent, so what are the drivers of this growth, considering the fact that inflation is rising every day, and then the impact of fuel subsidies and other factors. Thank you. 

Mr. Gourinchas: Thank you. I will ask Daniel. 

Mr. Leigh: Yes. Growth in Nigeria, steady but actually rising this year, from 2.9 percent last year to 3.3 percent this year. We have seen an expansion from the recovery in the oil sector, with a better security situation and also improved agriculture, benefiting from the better weather conditions and the introduction of dry season farming. So there’s a broad‑based increase also in the financial sector, in the IT sector. Inflation, yes, it has increased. Part of this reflects the reforms, the exchange rate and its pass‑through into other goods from imports to other goods. So this explains also why we revised up our inflation projection for this year to 26 percent. But with the tight monetary policies and that interest rate increase, significant interest rate increases during February and March, we think—we see inflation declining to 23 percent next year and then 18 percent in 2026. So in the right direction, definitely. 

Mr. De Haro: Last question is going to be the gentleman there. And I am sorry. There’s going to be more opportunities to ask more questions. There are regional press briefings happening later this week where you can tackle all the country‑specific questions.    

Question: Hi. I am from Geo TV Pakistan. We all know climate change is a big problem. So how has the climate change impacted the growth and inflation in the last few years? Because in 2022, floods in Pakistan caused an estimated economic loss of around $30 billion. This is an estimate by the World Bank. And I also would like to know, what is the IMF doing to help these countries that are being damaged by the climate change? 

Mr. Gourinchas: So we are seeing, in fact, increased weather shocks related to the climate transition, and that is impacting sometimes countries at a macroeconomic level. And the example of Pakistan I think is a relevant one here. But there are other countries that are, of course, in that situation. And often, what we have is that countries that are among the low‑income countries might be more vulnerable to these extreme weather events. So it’s a conjunction of having relatively little in terms of fiscal buffers or ability or infrastructure and the capacity to deal with these events and, therefore, they have a much larger impact on people’s well‑being and livelihoods. So that’s something that is factored into our rounds of projections. We do take into account the broad array of risks that countries are facing. 

The second part of your question, what the Fund can do. I mean, the Fund, along with other organizations, is of course—international organizations, is very focused on climate issues. We have an instrument, the Resilience and Sustainability Trust, that is designed to help countries build that resilience going forward and help them be able to weather these types of shocks. We are also involved in providing technical assistance in helping countries both adapt and put in place mitigation strategies for climate change. Thanks.

Mr. De Haro: OK. So we are going to have to wrap it here but on behalf of Pierre‑Olivier, Petya, and Daniel, the Research Department, Communications Department, I want to thank you all. A couple of reminders, the next press briefing is the Global Financial Stability Report in this same room. Tomorrow, pay attention to the Fiscal Monitor and as I said, later this week, regional press briefings. You can tackle those country‑specific questions. And don’t forget also to come to the Managing Director’s press briefing. Thank you very much. Any comments, questions, media@IMF.org.