Global Economic Outlook: Q4 2024

In the last quarter of 2024, the global economy continues to see steady growth, as inflation has moderated, private consumption has been sustained and monetary policy has started to ease in key markets. Nevertheless, short- and medium-term growth prospects are challenged by rising geopolitical risks and growing policy uncertainty.

In Euromonitor International’s Q4 2024 baseline forecast, global real GDP growth is expected to reach 3.2% in 2024 and maintain this rate of growth in 2025, thus staying below the pre-pandemic levels. Global inflation would ease to 3.8% in 2025, significantly down from 6.5% in 2024.

Advanced economies to see a mixed picture in 2025

Real GDP growth forecasts for advanced economies are estimated to remain stable, but underwhelming at 1.7% for both 2024 and 2025, on the back of a still high rate environment and subdued consumer and business confidence. The pace of growth, however, diverges across economies. 

While slowing, the US economy remained in good shape in the second half of 2024, driven by ongoing resilience in consumer spending. US real GDP is now projected to grow by 2.6% in 2024, higher than our previous estimates. Growth momentum, however, is expected to slow down in 2025, mainly due to the lagging effects of high interest rates and potentially weakening labour market and consumer spending.

With Donald Trump winning the presidency, the US outlook might alter slightly in the near term, facing both upside risks (eg tax cuts) and downside risks (eg tariffs and labour supply constraints due to stricter immigration controls)

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The Eurozone continues to recover gradually from its 2023 dip (as the economy was hit hard by high energy prices and inflation) and is expected to see faster growth in 2025, as interest rates fall and the economy emerges from its stagnation. The recovery remains sluggish, however, due primarily to the economic downturn in Germany, the region’s largest economy, which is expected to experience no growth in 2024, amid declining investment and weak exports.

In Japan, after weak growth in 2024, the outlook for the economy is expected to improve in 2025, with the real GDP growth rate being estimated at 1.2%. Rising base salaries, an anticipated easing of inflation and the recently launched tax cut programme are expected to support consumer purchasing power and bolster consumer confidence.

Economic growth in emerging markets remains solid, while showing a stagnating trend

Emerging and developing economies are expected to grow by 4.4% in 2025, slightly down from 4.5% in 2024, mainly due to expected slower growth in China and Latin America.

China’s growth outlook for 2025 shows an improvement in Euromonitor International’s Q4 2024 baseline forecasts, supported by a new stimulus push by the government in Q3 2024. However, China is still struggling to meet the official real GDP growth target of 5% annually, due to its ailing property sector, weak domestic demand and sluggish exports.

China’s real GDP growth is forecast to soften further from 4.8% in 2024 to 4.5% in 2025

^{Source: Euromonitor International}

Consumer confidence remains near historic lows, with households facing economic uncertainty, slower income gains, and negative wealth effects from the property downturn.

Brazil has witnessed improved economic performance in 2024, but growth momentum is expected to soften in 2025 due to persisting inflationary pressures and high interest rates. On the bright side, the economies of India and Southeast Asia continue to be robust, driven by solid domestic demand and increased investment.

Global disinflation on its last mile

The global disinflation process could reach a milestone in 2025, as inflation is expected to return to its target of 2% in key markets. Services price inflation remains elevated in some markets but expected slower wage growth should help tame price pressures in the sector. Meanwhile, soft energy and goods prices, amid muted recovery in demand and sufficient supply, should continue to push inflation down.

Coupled with falling interest rates, a stabilisation in prices should provide some financial relief for businesses and consumers in 2025

^{Source: Euromonitor International}

In Euromonitor’s Q4 2024 baseline forecasts, global consumer price inflation is expected to ease from 6.5% in 2024 to 3.8% in 2025. Excluding Argentina’s hyperinflation, global inflation would be at 4.8% in 2024 and 3.3% in 2025.

Adverse risks to global inflation and growth continue to broaden

Although the global economy is in better shape now, it is still underperforming due to ongoing tight financial conditions and a slowing Chinese economy. Meanwhile, rising geopolitical tensions, trade protectionist policy and climate shocks represent major upside risks for global inflation and downside risks to the global baseline outlook.Geopolitical uncertainties have increased in the second half of 2024, while further intensification could trigger renewed disruptions in global supply chains, leading to higher commodity prices and surging inflation, and thus lower growth. While Trump’s policy in his second US presidency is to unfold in the next months, the effects would likely be an increase in the risk of a deepening global fragmentation, with intensified protectionist policies, affecting global trade and undermining productivity. High borrowing costs and a strong US dollar could also trigger a global debt crisis, with developing countries, particularly Latin American economies, being most vulnerable.

Read our full report, Global Economic Forecasts: Q4 2024, and join our live webinar on 4 December 2024 for the latest forecasts, trends and insights on the global economy in 2025. Register here: Economic outlook for 2025: Global forecasts and insights.