Chief Economists Outlook January 2025

9Chief Economists Outlook 7 Eurostat. (2024). 8 Ibid. 9 Draghi, M. (2024). 10 International Monetary Fund (IMF). (2024b). 11 Ibid. 12 Hale et al. (2024). 13 International Monetary Fund (IMF) Asia and Pacific Department. (2024). 14 International Monetary Fund (IMF). (2024a).For almost three years, Europe has registered the weakest regional prospects among chief economists, and in the latest survey, 74% of respondents expect weak or very weak growth for the region. The challenges facing the region were highlighted in the most recent national accounts data for the Euro area, which recorded aggregate year-on- year growth of just 0.9% in the third quarter of last year – this compares to 2.7% in the US over the same period.7 The Euro area’s largest economy, Germany, contracted by 0.3%, while there was growth of 0.4% in Italy, 1.2% in France and 3.4% in Spain.8 In a September report, Mario Draghi, the former Italian prime minister and governor of the European Central Bank, spotlighted Europe’s economic challenges. Sounding an alarm for the region’s economic prospects, his report warned that annual investment equivalent to 5% of GDP would be required to revive its economic dynamism.9 However, the prospects of determined action to boost the European economy looked distant at the end of 2024, with both Germany and France mired in domestic political difficulties. The outlook for China also remains weak. Growth is expected to slow gradually and is projected by the IMF at 4.8% in 2024 and 4.5% in 2025.10 Earlier forecasts for 2024 were revised downwards from 5% as a result of disappointing domestic demand in the second quarter, and high-frequency data suggest that while exports have picked up, consumer demand has remained subdued.11 November retail sales growth of 3% missed expectations of 4.6%.12 Over the medium term, growth is projected to slow down to about 3.3% in 2029 amid headwinds from weak productivity and an ageing population.13 In the other regions covered in the survey, the assessments of the chief economists surveyed remain broadly unchanged from the previous survey. For the Middle East and North Africa, almost two-thirds expect moderate growth in the year ahead, but the risks to this outlook are highlighted by the fact that more than twice as many respondents expect weak growth rather than strong. For Sub-Saharan Africa, the share of chief economists who expect moderate or stronger growth in 2025 increased to 78%. This uptick is in line with the projection of solid 4.2% growth for the region this year from the IMF.14 For Latin America and the Caribbean, almost two-thirds of chief economists continue to expect moderate growth this year.