Global Economic Forecasts: Q3 2024

August 2024

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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Key Findings

Global economy sees stable but below-potential growth prospects amid various downside risks

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.

Outlook for major economies improve, but uncertainty remains

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.

Global disinflation is slowing, while upside risks to inflation are increasing

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.

 

Scope
Key findings
Global baseline outlook: stable, but muted growth prospects
Global inflation outlook: disinflation continues but risks remain
Various risk factors could change the baseline outlook
Real GDP annual growth forecasts and revisions from last quarter: AE
Real GDP annual growth forecasts and revisions from last quarter - EMDE
Inflation forecasts
Central bank interest rates quarterly forecasts
Global scenario map: risks still tilted to the downside
Global Risk Index scores and rankings
Global Fragmentation scenario: policy-induced decoupling would weaken global growth
Global Stagflation scenario: diverse economic and political challenges can lead to stagflation
Commodity Price Hike scenario: geopolitical tensions a persistent risk to commodity prices
US: economic resilience continues, but growth momentum expected to soften
US: price pressures are easing, reinforcing disinflationary trends
U S: businesses and consumers stay prudent amid a high-cost environment
US: political uncertainty and higher-for-longer interest rates threaten a soft landing
China: flagging consumer demand and property issues dampen economic potential
China: business and consumer sentiment remains subdued amid multiple headwinds
China: trade tensions and real estate downturn are key threats to growth outlook
India: growth prospects improve on robust domestic demand
India: despite economic resilience, global headwinds could slow down India’s growth
Japan: weak domestic demand weighs on economic outlook
Japan: global commodity market shocks are some of the major threats
Indonesia: outlook remains robust supported by strong domestic market
Eurozone: economic outlook improves slightly in 2024, yet remains below potential
Eurozone: entrenched core inflation may hinder a faster loosening of monetary policy
Eurozone: potential recession remains the key risk to the Eurozone’s economy
UK: economic outlook improves on stronger resilience in consumer spending and investment
UK: global slowdown, Europe’s downturn and high inflation are key risks to the outlook
Russia: government and consumer spending support growth, but risks persist
Russia: spillovers from the war, global fragmentation and China’s slowdown are major risks
Brazil: impacts of floods, stickier inflation and high borrowing costs dampen momentum
Brazil: a slowdown in foreign markets and a regional crisis could dampen the outlook
Mexico: elevated inflation, high interest rates and political uncertainty are key headwinds
Baseline and alternative scenarios: Q3 2024
Alternative scenarios (continued): Q3 2024
Alternative scenarios (continued): Q3 2024
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