What's the 2024 global economic outlook?


Weak global economy in 2024?

In the next year, many experts believe the world economy will become weaker. A recent survey found that 61% of top economists share this concern.

There are a few reasons for this uncertainty. One key factor is the fear of an economic downturn, although it's not as widespread as it used to be. People are now more worried about China's economy, which is experiencing deflation.

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Geopolitical tensions and local politics are also causing unease. The survey shows that nine out of ten experts think international politics will cause financial instability in the coming year.

Domestic politics can play a role too, as 79% of those surveyed believe they could also create economic instability, especially with the upcoming U.S. elections.

## **Inflation and interest rates**

On the bright side, most experts are optimistic about inflation. 86% of them think that the worst of rising global prices will improve in a year.

Their views on interest rates match this optimism, with 93% expecting slower rate increases in places where inflation is a concern. They also predict less coordination among central banks in managing their interest rates.

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However, the overall sentiment remains cautious. Experts believe that central banks will be careful in their monetary policies in the months ahead, as they deal with various economic issues like climate change, shifting demographics, and growing global tensions.

## **When it comes to the U.S...**

The country experienced 2.2% GDP growth in the first quarter of 2023 and 2.1% in the second quarter. The Federal Reserve expects this growth to continue, but at a slower pace of 1.5% in 2024.

## **Controlling inflation through interest rates**

The Federal Reserve has been raising interest rates to tackle inflation. So far, this approach has been effective, but they still have work to do in 2024.

The Fed's goal is to keep core inflation, which excludes volatile food and energy prices, around 2%. In early 2023, it rose as high as 5.3%, but by August, it had fallen to 3.9%. This is still higher than the Fed's target, but it's moving in the right direction.

## **Balancing act**

Inflation can indicate an overheating economy, so the Fed has been raising interest rates to control it without causing an economic downturn. Experts appreciate the Fed's performance so far but note that the situation isn't completely stable.

## **More rate hikes in 2024?**

The Fed has raised interest rates since 2022, and there's a possibility of more rate hikes by the end of 2023. However, some experts believe that rising long-term U.S. Treasury yields might make additional rate hikes unnecessary.

## **Predicting a recession in 2024?**

While there's no official government definition for an economic recession, it's commonly understood as two consecutive quarters of negative GDP growth. The Fed no longer predicts a prolonged U.S. recession, but there's a concerning sign: the yield curve for 10-year and 2-year U.S. Treasuries has been inverted since mid-2022, historically a precursor to a recession.

The New York Fed's model suggests a 56.12% chance of a U.S. recession by September 2024. Richard Saperstein, CIO at Treasury Partners, notes that the strong 2023 stock market performance might lead to a false sense of security as 2024 approaches. There's hope for a gentle economic slowdown, but higher interest rates and their impact on growth and earnings pose uncertainties.

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For those worried about a 2024 recession, monitoring monthly job reports from the Labor Department, usually released on the first Friday of each month, can provide insights. As long as the economy keeps adding jobs, negative GDP growth is less likely, experts say.

## **Economic risks in 2024**

While some economists are hopeful about a "soft landing" in 2024, there are potential risks. High inflation could lead to further interest rate hikes, impacting corporate earnings and economic growth. Additionally, financial pressures such as student loan repayments, slowing wage growth, and rising household debt may affect consumer spending. Geopolitical risks, like conflicts in Ukraine and the Middle East, could also influence the global economy, particularly in an election year like 2024.


The 2024 global economic outlook is uncertain, with 61% of top economists expressing concerns about a weaker economy. Factors include fears of an economic downturn, China's deflation, geopolitical tensions, and U.S. elections. Despite optimism about improving inflation and expectations of slower interest rate increases, caution prevails. The U.S. anticipates slower GDP growth in 2024. The Federal Reserve is addressing inflation by raising interest rates, with potential for more hikes. Concerns about a 2024 recession arise from an inverted yield curve, with a 56.12% chance according to the New York Fed's model. Economic risks include high inflation, interest rate impacts, financial pressures, and geopolitical conflicts. Monitoring job reports is suggested for insights into economic trends.

What's the 2024 global economic outlook?

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