Challenges in Global Economic Growth and Role of AI The IMF expects global economic growth to remain resilient at 3.2%, below historical averages, with medium-term prospects being the lowest in decades due to factors like lower productivity and aging demographics. Productivity growth has been declining since the early 2000s, driven by misallocation of resources and weak investment. AI holds promise as a potential game changer for boosting productivity but uncertainties remain about its impact.
Outlook on Global Inflation Amid Geopolitical Risks Global inflation is expected to decline this year despite geopolitical tensions like Iran's attack on Israel potentially affecting oil prices. The outlook depends on developments in the Middle East which could impact commodity markets; however, alternative supply sources may mitigate disruptions if they occur.
Monetary Policy Expectations & Trade Dynamics Central banks are anticipated to cut rates later this year based on declining inflation trends; ECB likely cutting rates before US Federal Reserve due to differing economic conditions between Euro area and US. While Fed Chair Powell awaits more data before rate cuts, projections suggest possible rate adjustments depending on future economic indicators.