In many parts of the world, inflation this year could be lower than initially expected. This is indicated by a survey by the Munich Ifo Institute among a good 1,400 economists in 133 countries. However, the average global expectations for 2023, 2024 and 2026 are still well above the long-term averages of the pre-Corona years. “We will have to adjust to high inflation rates,” says Ifo researcher Niklas Potrafke.
Regional disparities are striking: the lowest forecasts for this year are North America at 4.5 percent inflation, Southeast Asia at 4.8, Western Europe at 4.9 and East Asia, which includes China, at 5 .0 percent. For them, inflation expectations are 0.3 to 0.5 percentage points lower than three months ago.
Highest inflation rates in East Africa
Germany pulls the average for Western Europe upwards: In Germany, the economists expected 5.8 percent in the current year. For the EU as a whole, an average of 7.5 percent is expected – here, among other things, high expectations in some Eastern European countries such as Hungary come into play.
Economists are forecasting the highest inflation rates in the world for the current year in East Africa at 110 percent. That is 80 points more than in the first quarter. In North Africa it is 64 percent – 31 points more than three months ago. In South America, on the other hand, the situation has calmed down to some extent: Here, the expected inflation in the current year has almost halved to 23 percent.
In the longer term, experts expect falling inflation rates in almost all regions. Exceptions are East Asia with China, where an increase to 5.6 percent is expected for the coming year before falling again, and Central Asia, where higher values are forecast in 2026.
Global mean of 7.0 percent
The world’s lowest inflation rates in the coming years are forecast for Western Europe at 3.4 percent in 2024 and 2.6 percent in 2026. North America follows with 3.5 and 2.7 percent. The values are also falling in the EU – but only to 4.8 percent in the coming year and 3.3 percent in 2026. The forecast for 2026 is even higher in North Africa with 29 percent, East Africa with 22 and Central Asia with 17.5 Percent.
All in all, according to the Ifo, this results in an expected global average inflation rate of 7.0 percent for the current year. Experts expect 6 percent in 2024 and 4.9 in 2026. For the global number, however, the Ifo does not use the average of the forecasts – as with the other values - but the median. This mean is less affected by single extreme numbers. For example, the numbers 1, 2, 3, 4, and 100 have an average of 22 and a median of 3.
