News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.
It’s a bit like that part of the movie where the ragtag crew has already climbed over the ridiculously rickety bridge, narrowly avoided some quicksand, and finally escaped the clutches of the fire-breathing dragon. Seems like it’s time to celebrate.
Then, the real drama starts: They’re running to freedom—and straight toward a cliff. And let’s add some hungry wolves and hot lava at the bottom for good measure.
At least, that’s one way to interpret the International Monetary Fund’s latest World Economic Outlook report, which celebrates the successes of the global battle against inflation while warning against downside risks.
“It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries,” IMF chief economist Pierre-Olivier Gourinchas said in a release tied to the report. “In most countries, inflation is now hovering close to central bank targets, paving the way for monetary easing across major central banks.”
Global headline inflation will dip to 3.5% by the end of 2025, according to the agency, which is “slightly below the average during the two decades before the pandemic.” It’s a significant dip from the 9.4% year over year rate seen in Q3 2022.
And just like defeating a dragon and tiptoeing around quicksand, it’s something worth celebrating. “The decline in inflation without a global recession is a major achievement,” Gourinchas stressed.
But let’s not forget about that cliff with the ravening wolves. Gourinchas added that while the inflation decline is good news, “downside risks are increasing and now dominate the outlook.”
Specifically, the IMF warned of the risks posed by armed conflicts, particularly in the Middle East; trade policies that “can significantly lower output relative to our baseline forecast;” and tight monetary policy that lasts too long.
And beyond those specific threats, Gourinchas also cautioned that, despite the good inflation news, “it may be harder next time, as workers and firms will be more vigilant about protecting pay and profits.”
Remember: Just because you might let out a sigh of relief after slaying a dragon/curbing inflation, it doesn’t mean your hero’s journey is over.