17 April 2024, London – Standard Chartered (“the Bank”) now expect global GDP growth of 3.1% this year, unchanged from 2023, and 3.2% in 2025, an improvement from earlier forecasts of 2.9% and 3.1%.
According to the Bank’s Global Focus Economic Outlook Q2-2024, which covers the outlook for 58 economies, key geopolitical issues and financial market implications this year and beyond, Asia is set to remain the primary engine of global growth, with Africa and MENAP expected to grow faster in 2024 than in 2023. That said, key elections in multiple countries this year may temporarily weigh on investment activity and decisions over the timing and pace of rate cuts remain challenging given lingering inflation concerns.
Major central banks are likely to start their rate-cutting cycles in the coming months, opening the door for Q3 policy easing by central banks in Asia. While inflation has moderated over the past year, domestic price pressures are still a concern given strong labour markets and sticky wages in many economies.
China continues to export disinflation, but global goods prices remain vulnerable to periodic supply-chain disruptions. A ramp-up of trade protectionism could add to costs. The disinflationary impact of falling food and energy prices may be waning before lower inflation expectations become anchored. In particular, rising global oil demand and disappointing non-OPEC supply may drive prices higher even if OPEC output cuts are not extended into H2.
While inflation has yet to return to target in many economies, central banks are also wary that keeping rates too high for too long risks damaging economic activity. Elevated real rates have weakened credit availability and raised debt delinquency rates, and the impact of earlier monetary tightening is likely still working its way through.
Standard Chartered expects below-trend growth across major economies for much of 2024. The Bank’s US growth forecast upgrade for 2024 reflects current labour-market strength and ongoing growth momentum from H2-2023. But deteriorating labour-market surveys and falling real incomes point to softer US growth in H2-2024. The euro-area economy likely stalled in Q1 and the credit impulse remains negative. Standard Chartered expect another year of sub-1% GDP growth, albeit with momentum improving on higher real wage growth.
Sarah Hewin, Head of Research, Europe and Americas at Standard Chartered Bank commented: “Global activity is likely gradually to regain momentum as monetary policy becomes less restrictive; lower policy rates should underpin stronger global growth in 2025. Among major central banks, we expect the European Central Bank and the Bank of Canada to start cutting rates in June, the Fed in July, and the Bank of England in August. These are close calls, particularly in the US; each inflation-related data point in the coming months will be key.”
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