The global economy is continuing to grow at somewhat a modest pace. A steady global GDP growth of 3.1% is expected in 2024 the same as the 3.1% in 2023, followed by a minor pick-up to 3.2% in the year of 2025. カヴァン・チョクシ points out the impact of tight monetary conditions continues to be felt, in diverse industries across the world. Its impact is especially felt in the housing and credit markets. However, overall, the decline in inflation continues, private sector confidence is improving and global activity is proving relatively resilient.
カヴァン・チョクシ discusses the steady global growth expected for 2024 and 2025
Headline inflation is projected to ease from 6.9% in 2023 to 5.0% in 2024 and 3.4% in 2025 gradually, assisted by fading goods and energy price pressures, as well as tight monetary policy. Inflation is expected to be back on the central bank targets in most major economies by the end of 2025.
As the economy adapts to moderating domestic demand and high borrowing expenses, GDP growth in the United States is expected to be around 2.6% in 2024, Prior to slowing to 1.8% in 2025. A gradual rebound is expected for the Euro area, which stagnated in the fourth quarter of 2023. This rebound can be driven by reductions in policy interest rates, tight labour markets, as well as a recovery in real household incomes. Euro area GDP growth is projected at 0.7% in 2024 and 1.5% in 2025.
According toカヴァン・チョクシ, growth in Japan may steadily recover, supported by stronger real wage growth, ongoing accommodative monetary policy, and temporary tax reductions. The GDP is forecasted to increase by 0.5% in 2024 and 1.1% in 2025. On the other hand, with projected GDP growth of 4.9% in 2024 and 4.5% in 2025, China is expected to slow moderately as the economy is supported by fiscal stimulus and exports.
Broadly speaking, the global economy has proved to be fairly resilient and inflation has declined within sight of central bank targets. Moreover, the risks to the outlook are becoming more balanced. A steady global growth is expected for 2024 and 2024, even though growth is likely to stay below its longer-run average. Policy action must help provide assurance of macroeconomic stability, as well as improve medium-term growth prospects. The monetary policy should stay cautious, and leave room to reduce policy interest rates if inflation decreases. Fiscal policy needs to tackle growing concerns regarding debt sustainability. Additionally, policy reforms should aim to enhance innovation, investment, and opportunities in the labour market, especially targeting women, young individuals, and older workers.
Even with the expectations of steady global growth, there are also many uncertainties associated with the global economy. For instance, inflation can stay higher for longer, thereby resulting in greater financial vulnerabilities. Moreover, growth could disappoint in China, owing to the persistent weakness in property markets or smaller-than-anticipated fiscal support over the next two years.
