The extreme monetary policy tightening that occurred in 2023 will have a negative impact on global growth this year. However, with central banks’ inflation targets on the horizon, widespread cuts in policy interest rates should occur.
In the US, GDP growth will remain stagnant but with core inflation under control, the Fed could cut rates by midyear. Similarly, in Canada, equally weak GDP growth and ongoing falls in inflation may prompt the Bank of Canada to reduce rates even sooner.
Weak projected growth is anticipated for the UK as this region continues to face high inflation, volatile energy prices and supply chain challenges, all of which will prevent the Bank of England from lowering interest rates until late 2024. As emerging European markets continue to battle this same elevated inflation, monetary policy is projected to remain tight throughout the year; however, these economies should help to improve GDP output for the region.
Ongoing growth is expected to remain strong in India as the country continues to benefit from healthy domestic demand and strong growth in the manufacturing and services sectors. This region should be the front runner for GDP output in 2024 and 2025.
China’s fiscal stimulus policy which was intended to support economic recovery will prove favorable in the first half of the year; however, various headwinds will prevent sustained recovery. Likewise, the overall weaker global demand will result in slower growth for the emerging Asian markets, but these economies are predicted to perform better than other developing countries.
