Global GDP growth will slow to 2.7% in 2024
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Global GDP growth in 2024 will slow to 2.7% from 2.9% in 2023, predict at the Organization for Economic Co-operation and Development (OECD). The expected value of the indicator next year is the minimum since Covid 2020. The slowdown in growth in the organization’s forecast is called a direct consequence of the strict monetary policy carried out by the central banks of developed countries. Moreover, while the IMF and the World Bank predict a reduction in rates over the next six months, the OECD assumes that due to inflationary pressure they will remain high until the end of 2024. Inflation is expected to gradually decline to the central bank targets by 2025. According to forecasts, inflation in OECD countries will be 7% in 2023, 5.2% in 2024 and 3.8% in 2025.
Among the reasons for the slowdown in global economic growth associated with the tight monetary policy of the ECB and the Federal Reserve, the OECD cites a contraction in business activity and weak trade. This is confirmed, for example, by recent data from S&P Global: the PMI of the euro area countries remained in the negative in November – the indicator value was 47.1 points (below 50 points), which indicates a decline in economic activity. Some recovery in Europe and in the world as a whole is expected only in 2025 – then, according to analysts, global GDP will grow by 3%. The acceleration of trade growth predicted by the WTO, according to OECD estimates, is completely postponed due to “increased geopolitical tensions” in connection with the war in the Middle East. So far, however, the conflict has not had a noticeable impact on supplies.
US GDP growth is expected by the OECD to be 1.5% in 2024 (see chart), following 2.4% in 2023, the same as the organization’s estimates in September (see “Kommersant” from September 20i), somewhat improved: the US economy turned out to be more resistant to the consequences of strict monetary policy than analysts predicted.
In the November report, growth estimates for China’s economy were also revised upward; however, in this country, GDP growth is likely to slow down: to 4.7% next year from 5.2% this year. It should be noted that due to the low rate of recovery in China, despite the stimulus measures, external demand in the euro area countries remains restrained, which in turn affects the economic growth rate. After growing by 0.6% this year, the eurozone economy is expected to expand by 0.9% in 2024 and 1.1% in 2025.
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