04.11.2024
The International Monetary Fund (IMF) has released its latest forecast for the global economy, highlighting five key trends expected to influence global economic growth in the coming years. Although inflation is expected to decrease, protectionism and trade restrictions remain a primary risk to global growth. Here’s an overview of these main topics and the opportunities and challenges they present for Bulgaria and regional businesses, especially in Ruse.
The IMF reports that the global economy is showing resilience, with global GDP expected to grow by 3.2% in 2024 and 2025. The IMF considers the reduction in inflation without leading to a recession a significant achievement. The reasons for this reduction include the recovery of supply chains, falling energy prices, and migration processes that have cooled the labor market.
Inflation in the services sector remains high in many regions due to rising wages. Many workers and unions continue to negotiate higher wages to compensate for increased living costs. The IMF notes that this trend is similar to previous inflationary periods and, for now, does not pose a risk of a wage-price spiral.
The IMF highlights that the US economy is growing faster than Europe’s, particularly in the technology sector. Europe faces significant challenges related to an aging population, low productivity, and limited investments in technology and infrastructure. The IMF warns that without substantial progress in these areas, Europe risks entering a period of slow growth and economic stagnation.
Following substantial spending during the pandemic, the IMF recommends that countries stabilize public debt and restore fiscal buffers by focusing efforts on reducing costs and allocating resources more efficiently. Countries should refrain from additional fiscal stimulus to avoid undermining the efforts of central banks to control inflation.
The IMF stresses that an expansion of trade restrictions could have significant negative consequences for the global economy. According to the IMF, trade barriers could lead to a long-term loss of up to 7% of global GDP, with small and open economies like Bulgaria being the most affected.
The IMF forecasts a GDP growth rate of 2.3% for Bulgaria in 2024 and 2.5% in 2025. However, the reduction in exports and industrial production creates risks for future economic development. Domestic consumption remains a key driver, while delays in the absorption of EU funds and in the National Recovery and Resilience Plan further burden the situation.
Inflation in Bulgaria is following the global trend and is expected to slow to 2.8% in 2024, with stabilization around 2% projected in the coming years.
For businesses in Ruse and the region, the primary challenge will be the slowed external demand, particularly from key partners in Europe. Export-oriented companies should consider opportunities for market diversification and invest in innovations and technologies to enhance their international competitiveness.
Nonetheless, expectations of stable inflation and relatively low unemployment provide a better environment for long-term planning and sustainable growth. Companies focused on the domestic market can benefit from stable domestic consumption by expanding their activities and strengthening ties with local and national partners.
The IMF’s forecasts emphasize the need for integration between science, innovation, and business. For Ruse and the region, this creates an opportunity to position itself as a technological and industrial hub, attracting new investments and strengthening the regional economy. Such efforts will be crucial for mitigating the impact of global economic changes and will support the region’s sustainable development.
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Source: Capital
Read the article by Vasil Minkov: Five Key Trends for the Global Economy Through the Eyes of the IMF
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