IMF Weekend Read

 

Dear MARIA,   Welcome to a special edition of the Weekend Read featuring the IMF’s regional economic outlook: Building Resilience Across Sub-Saharan Africa Asia's Resilience Tested Europe Needs to Focus on Growth and Fiscal Discipline Adjusting Latin America's Growth Sails Middle East and Central Asia Show Surprising Resilience AFRICA Building Resilience Across Sub-Saharan Africa “Sub-Saharan Africa’s economic growth is projected to hold steady at 4.1 percent in 2025, with a modest pickup expected in 2026,” said Abebe Selassie, director of the IMF’s African department, in a briefing last week. He attributed this resilience to ongoing macroeconomic stabilization and reform efforts across key economies.   Selassie acknowledged that the external environment remains challenging, including slowing global growth, diverging commodity prices, and deteriorating global trade policy and aid landscapes.   While countries like Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda are among the world’s fastest-growing, resource-intensive and conflict-affected nations continue to face significant challenges, he noted.   On policy priorities, Selassie emphasized the need for domestic revenue mobilization through comprehensive tax reforms and improved administration—and highlighted the importance of building public trust and conducting impact assessments. Enhancing debt transparency and strengthening public financial management can help reduce borrowing costs and unlock innovative financing, he noted. Learn More ASIA Asia's Resilience Tested Asia’s economy is more resilient than previously expected, thanks to strong exports, a tech boom, and macroeconomic accommodation reinforced by favorable financial conditions, according to Krishna Srinivasan, director of the IMF’s Asia and Pacific Department.   Asia will also remain a driver of global growth, contributing about 60 percent this year and next, Srinivasan said at a press briefing on the economic outlook for the region. The region’s growth will moderate to 4.1 percent next year from 4.5 percent this year, according to the department’s latest projections. Inflation is likely to remain muted.   Growth is slower this decade compared to the last. Aging populations, weaker productivity, pandemic scarring, and rising youth unemployment are weighing on economic prospects.    And Asia still faces risks. Tariffs could increase further, interest rates could rise again should trade policy uncertainty or geopolitical tensions intensify, and tighter financial conditions could stifle growth and increase debt vulnerabilities, Srinivasan said. Read More EUROPE Europe Needs to Focus on Growth and Fiscal Discipline “Europe can act, Europe must act, and it must do so now,” said Alfred Kammer, director of the IMF's European department, in a press briefing last week, urging policymakers to tackle “dismal” long-term growth through a bold reform agenda.   He called for cutting intra-EU trade barriers, completing the capital markets union, easing labor mobility, and securing cheaper, more reliable energy. Together with productivity-boosting national measures, these reforms could lift Europe’s GDP by 9 percent over 15 years.   Europe’s post-pandemic recovery is giving way to a period of weak medium-term growth. Lower interest rates are lifting consumption and investment, but new headwinds from trade and geopolitical tensions are expected to shave about half a percentage point off growth through 2026.   Growth forecasts for 2025 were modestly upgraded to 1.2 percent for the euro area and 2.3 percent for Central, Eastern, and Southeastern European economies.   Kammer noted strong near-term growth in Spain driven by services and job creation, while deputy director Helge Berger highlighted Italy’s deficit reduction thanks to fiscal overperformance. The IMF is also discussing a new program for Ukraine to support reconstruction and fiscal sustainability amid the ongoing war. Read More LATIN AMERICA Adjusting Latin America's Growth Sails Latin America and the Caribbean have weathered recent global uncertainties relatively well, said Rodrigo Valdés, director of the IMF’s Western Hemisphere Department in a press briefing last week. Growth is projected to remain steady at 2.4 percent for 2025, and to slow down moderately next year.   Supportive global conditions—such as stabilized commodity prices, eased financial conditions, and resilient exports—have helped maintain robust labor markets and private consumption. Many countries have benefited from low trade exposure to the U.S. and lower tariffs compared to other emerging economies.   However, macroeconomic policy calibration remains challenging. While fiscal positions are expected to strengthen, delays in fiscal consolidation are evident, with rising public debt ratios posing risks.   Valdes recommended that countries  reinforce policy frameworks, rebuild their capacity to spend in the case of need, and foster growth opportunities. “As the saying goes, countries may not control the winds, but they can adjust their sails,” he said.  Learn More MIDDLE EAST & CENTRAL ASIA Middle East and Central Asia Show Surprising Resilience Despite a year marked by trade tensions and regional conflict, the economies of the Middle East, North Africa, Pakistan and the Caucuses have shown resilience.   “Growth has held up better than expected and the impact of higher U.S. tariffs and geopolitical tensions has been short-lived,” Jihad Azour, director of the IMF's Middle East and Central Asia department, said in a press briefing last week.   Growth in the Middle East and North Africa will increase to 3.2 percent this year and 3.7 percent in 2026, according to the department’s latest projections. Inflation should remain moderate, helped by lower food and energy prices and tight monetary policies.   However, the outlook remains vulnerable to several risks, including renewed regional geopolitical tensions and commodity price volatility, particularly in oil.    As for the Caucasus and Central Asia, growth is projected to remain strong at 5.6 percent in 2025 - driven by strong consumption, credit expansion, and steady hydrocarbon exports - before easing gradually to about 4 percent next year.  Learn More Annual Meetings 2025 | Daily Wrap If you missed the Annual Meetings events, check out our daily recap here:  October 14 October 15 October 16 October 17 Thank you very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.   Noha Elbadawy  Editor | IMF Weekend Read   NElbadawy@imf.org