The global economic outlook has further improved in the second half of 2023, supported primarily by the resilience of the US economy. Yet, conversely, global growth expectations for 2024 have declined and even fallen below the rate of 2023. This second consecutive year of a slowing global economy will be due to the impact of restrictive monetary policy in advanced economies, paired with weaker growth in China. Developing economies will maintain solid growth, with Asia Pacific leading the way.
This report comes in PPT.
The global economy has shown unexpected resilience in 2023, despite elevated inflation and tighter monetary policy in most economies, resulting in a third consecutive upward revision of real GDP growth to 2.8%. This has been driven primarily by surprising strength of the US economy. For 2024, however, global growth expectations have declined and are now lower than for 2023, at 2.7%. This comes as restrictive monetary policy is expected to slow momentum in the services sector and labour markets in advanced economies, against the backdrop of already weak manufacturing and global trade.
The US has continued to surprise to the upside in 2023 behind resilient consumer spending and labour market strength. By contrast, the Eurozone has stagnated, especially as weak foreign demand has weighed on manufacturing. Yet, in 2024, the Eurozone is expected to recover modestly while the US will slow significantly as the impact of restrictive monetary policy eventually softens the labour market and slows consumer spending. China will continue to grapple with its ailing property sector and remain below potential in 2024 amid weak business and consumer confidence, seeing growth slow from 5% in 2023 to 4.7%.
The diverging trend between advanced and developing economies seen in 2023 will further widen in 2024, as growth in advanced economies is expected to slow to 1.1%, from 1.4% in 2023, while growth in developing economies will remain stable at 4.0% in 2024. Here, the Asia Pacific region will stay the primary source of global growth, driven in particular by the accelerating momentum in 2024 in Vietnam (6.0%), the Philippines (5.7%) and Indonesia (5.1%), plus India, the fastest growing major economy in 2024 at an expected 6.1%.
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