Economists around the world are growing increasingly cautious about the economic prospects for the year 2024, as central banks opt to delay anticipated rate cuts.
Persistently elevated interest rates in major economies are expected to contribute to a slowdown in global growth, following a surprisingly robust performance in 2023.
Slower Growth Projections
An aggregation of forecasts by the consulting firm Consensus Economics reveals that global economic growth is projected to expand by 2.1% in 2024, a decline from the expected 2.4% growth for the current year.
These projections reflect the cautious stance adopted by economists who have upgraded their expectations for 2023 performance by 1 percentage point, attributing the improvement to strong consumer demand and resilient labor markets.
Inflation and Delayed Rate Cuts
Economists are sounding alarm bells due to the belief that persistent high demand will keep inflation levels elevated for an extended period. This, in turn, will compel advanced economies’ central banks to maintain higher borrowing costs throughout much of 2024.
The prospect of delayed rate cuts is dampening hopes of an economic rebound next year, as rate-setters remain wary of quelling inflationary pressures.
Global Factors Contributing to Pessimism
Several interconnected factors are contributing to economists’ cautious outlook for 2024. China’s economic slowdown, characterized as “structural,” has added to the pessimism, and economists expect a further global slowdown.
The US economy’s strength has led to a reevaluation of rate cut expectations, resulting in forecasts of slower growth. Additionally, European economies, with the exception of Germany, are expected to maintain higher rates, impacting growth in the Eurozone.
Navigating Uncertainty in a Shifting Economic Landscape
As economists express growing concerns about the global economic outlook for 2024, the central banks’ decisions to delay rate cuts play a pivotal role in shaping these apprehensions. The anticipation of persistently higher interest rates, driven by prolonged inflation concerns, is dampening expectations of a rebound from the impressive 2023 performance.
With a keen eye on the evolving landscape of global finance, economists are keeping a watchful gaze on central banks’ monetary policy decisions and their implications for the trajectory of future growth.
