Reuters Poll Suggests Global Economy to Maintain Growth Momentum in 2024 Despite Challenges

Global economy set to maintain growth momentum through 2024, despite challenges. US and India to lead the charge, while Euro zone and China also see steady prospects. Inflation and interest rates to remain elevated, with central banks expected to cut rates later than anticipated.

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Ayesha Mumtaz
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Reuters Poll Suggests Global Economy to Maintain Growth Momentum in 2024 Despite Challenges

Reuters Poll Suggests Global Economy to Maintain Growth Momentum in 2024 Despite Challenges

The global economy is expected to maintain its growth momentum throughout 2024, despite facing various challenges, according to a Reuters poll of economists. The poll suggests that the world economy will continue to expand, with growth projected to remain steady in the coming years.

The United States and India are expected to contribute the most to this pickup in growth, while the euro zone and China are also expected to see no deterioration in their growth prospects. The global growth forecast for 2023 has been revised upwards to 2.9%, followed by 3.0% in 2025.

However, this stronger-than-expected growth is likely to keep inflation and interest rates higher for longer, with more than three-quarters of the central banks covered still expected to be dealing with above-target inflation by the end of this year. While major central banks are still expected to cut rates, the timing and extent of these cuts have been revised.

The U.S. Federal Reserve is now expected to start cutting rates in September and once more in Q4, much later than previously anticipated. The European Central Bank is also expected to cut rates by 25 basis points in June, followed by two more cuts in the second half of the year.

Why this matters: The global economy's resilience in the face of challenges has significant implications for businesses, investors, and policymakers worldwide. Sustained growth can lead to increased trade, investment opportunities, and improved living standards across nations.

Despite the positive outlook, economists caution that the us economy still faces potential headwinds. The U.S. economy started the year much weaker than expected, with GDP increased at a 1.6% annualized pace in the first quarter, lower than the 2.4% expected. Inflation also rose faster than expected, forcing the Federal Reserve to maintain a hawkish tone. The economy is likely to decelerate further in the coming quarters as consumers near the end of their spending splurge and savings rates fall due to sticky inflation.

Key Takeaways

  • Global economy expected to maintain growth momentum through 2024 despite challenges.
  • US and India to contribute most to growth, while euro zone and China see no deterioration.
  • Stronger growth to keep inflation and interest rates higher for longer, with central banks slow to cut.
  • US economy started 2024 weaker than expected, with GDP growth of 1.6% in Q1.
  • US economy likely to decelerate further as consumer spending and savings rates decline.