The global economic outlook remains stable, supported by falling inflation, a strong labour market and sustained consumption. Short-term growth prospects, however, are undermined by the still-high interest rate environment, while a potential cooling down of the labour market and growing political uncertainty may affect consumer and business confidence. The global economy still faces various downside risks, including geopolitical and trade tensions that could heighten inflationary pressures.
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This report comes in PPT.
The global economy continued to see resilience in the first half of 2024 on the back of sustained private consumption, while moderating inflation and expected interest rate cuts would support a steady growth momentum in H2 2024 that will carry into 2025. Global real GDP growth is expected to reach 3.0% in 2024 and stay at 3.1% in 2025, though remaining weaker than the pre-pandemic levels of 3.7% during 2010-2019. The ongoing tightened financial conditions, rising geopolitical tensions and policy uncertainty are however factors that would undermine a stronger recovery of the global economy in the coming months.
The US economy continues to show resilience in Q2 2024, leading to a further upgrade in its real GDP growth forecast to 2.3% in 2024. However, persistent service prices inflation, high consumer debts, a cooling labour market and political uncertainty will weigh on consumer spending and growth in the US. In the Eurozone, economic growth momentum improves slightly on easing inflation and stronger exports, but the recovery remains the weakest among key economies. Growth forecasts for both China and India are revised upward, reflecting the stronger economic activity in H1 2024, particularly in private consumption and exports. China, however, continues to face headwinds due to its ailing real estate sector and slowing productivity growth.
The global disinflation process continues, but inflation is falling on a slower pace compared to in 2023. Some price pressures are persistent, including those from the services sector and wage growth. The slowdown of disinflation would pose a challenge for major central banks, hindering a faster easing of monetary policy across advanced markets. Meanwhile, upside risks to inflation are rising on the back of escalating trade and geopolitical tensions, as well as growing policy uncertainty due to political upheavals in some parts of the world.
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