The global economy is navigating through a complex landscape marked by persistent geopolitical tensions. Nevertheless, easing inflationary pressure, central bank rate cuts (including by the ECB), and stronger consumer spending are mitigating these issues. Against this backdrop, GlobalData, a leading data and analytics company, has revised the global economic growth forecast for 2024 to 2.52% in its Q3 2024 update, marking a slight increase of 0.05 percentage points (pp) from earlier projections in Q2 2024.
In the “Global Macroeconomic Outlook – Q3 2024 Update,” GlobalData has revised economic growth projections for the Americas and Europe upward. The Americas’ forecast increased by 0.11 pp to 2.16%, driven by strong consumer spending, easing inflation, and rising real incomes. Increased private domestic business investments are also expected to support the region’s economic resilience. Europe’s growth projection rose by 0.21 pp to 1.38%, supported by higher real disposable incomes from stable wage growth and lower inflation, along with the recent ECB rate cuts, which are expected to stimulate the economic activity.
Conversely, forecasts for the Asia-Pacific (APAC) region and the Middle East & Africa (MEA) were reduced by 0.08 and 0.25 pps, respectively, to 2.59% and 3.57%. In MEA, the ongoing conflicts, oil market volatility, and shipping disruptions hinder the growth. For APAC, China’s economic slowdown, domestic challenges, and geopolitical tensions contributed to the downward revision.
Arnab Nath, Associate Project Manager, Economic Research Team at GlobalData, comments: “The slight upward revision in the global growth forecasts for 2024 reflects cautious optimism amid persistent geopolitical tensions. The resilience of key economies, including the US, which witnessed economic growth of 3% on an annual basis in Q2 2024 up from 1.4% in Q1, and the Eurozone, which achieved its strongest expansion in over a year at 0.6% in Q2 2024, contributes to this positive outlook.
“Gradual recoveries in the emerging markets will further bolster the projections. The major central banks, including the ECB, have commenced rate cuts, with the US Federal Reserve anticipated to follow suit, which may stimulate investments. However, central banks must tread carefully to avoid reigniting inflation or creating financial imbalance to ensure a balanced economic recovery.”
GlobalData forecasts the global inflation rate to decrease from 5.8% in 2023 to 4.5% in 2024, with a further decline to 3.7% anticipated by 2025. In 2024, the inflation rate is expected to decrease in all regions: the Americas, excluding Argentina and Venezuela (dropping to 5% in 2024 from 7.5% in 2023), Asia-Pacific (decreasing to 5% from 6.9%), Europe (declining to 4.3% from 7.8%), and the Middle East and Africa (falling to 22.1% from 27%).
Easing price pressure boosted the economic sentiment in major economies. According to GlobalData analysis using data from OECD, between January and June 2024, consumer and business confidence have risen considerably compared to the average of the previous six months in major economic groups, including the G20 and G7 countries. The rise in consumer confidence indicates robust consumer spending potential, which could bolster domestic demand and economic resilience.
Meanwhile, global political shifts indicated by the 2024 election cycle will have economic implications, including changes in trade policies, regulatory frameworks, and market stability. Far-right gains in Europe could result in protectionist measures, affecting international trade.
In South Korea and the UK, liberal victories may bring reforms that encourage foreign investment and market liberalization. Declining support for ruling parties in India and South Africa suggests potential instability, while voter dissatisfaction in Russia and Bangladesh signals economic uncertainty in these regions. These changes are likely to test global economic resilience.
Nath concludes: “While global growth is expected to remain stable, varying regional dynamics and persistent risks from geopolitical tensions may significantly shape the economic outlook for 2024 and 2025, necessitating careful observation of policy shifts and market trends.”
