Worrying forecast from the IMF: It could fall below the historical average

The International Monetary Fund (IMF) stated in its world economic outlook report that the global growth rate will fall to 2.8 percent by the end of the decade, dropping a full percentage point below the historical average. The IMF noted that the decline in productivity growth is responsible for more than half of the economic decline in advanced economies as well as emerging markets and low-income countries.

The IMF report included the following statements:

"A persistent low-growth scenario, combined with high interest rates, could put debt sustainability at risk and limit the government's capacity to counter economic slowdowns and invest in social welfare or environmental initiatives. Moreover, weak growth expectations could discourage capital and technology investments, potentially deepening the slowdown. All of this is further exacerbated by strong headwinds stemming from geoeconomic fragmentation and harmful unilateral trade and industrial policies."

However, it also stated that "this trend could be reversed with policies that address the misallocation of resources by improving the flexibility of product and labor markets, trade openness, and financial developments."