The global economy in 2024: Déjà vu or breakthrough?

Analyzing global forecasts
The global economy in 2024: Déjà vu or breakthrough?
Evolving economic landscape

As 2023 draws to a close, it leaves in its wake a series of shocks and adverse economic developments. The year witnessed persistent inflation rates, albeit lower than the preceding year, as central banks continued their trajectory of raising interest rates. Notably, the United States grappled with a significant banking crisis and experienced a noteworthy downgrade in its credit rating. 

Amid this backdrop, numerous questions loom over the economic landscape for 2024. Will central banks persist in their course of raising interest rates? Is there an anticipation of a gradual reduction in interest rates in the coming year, or is this expected to occur in 2025? What about the projected global economic growth rates? 

Major international banks foresee a further deceleration in global economic growth in 2024, influenced by escalating interest rates, surging energy prices, and a deceleration in the world’s two largest economies, namely the United States and China. According to a Reuters poll, the global economy is expected to grow by 2.9 percent this year, with a slowdown predicted for the following year to 2.6 percent. 

While most economists anticipate the global economy avoiding a recession, concerns linger about the possibility of a “moderate recession” in Europe and the U.K. Despite uncertainties surrounding the Federal Reserve’s monetary tightening policy, a soft landing for the US economy remains plausible. In contrast, China’s growth appears fragile, exacerbated by multinational companies seeking cost-effective alternative production destinations. 

Economy Middle East scrutinized the forecasts of major international banks, revealing divergent outlooks: 

Goldman Sachs projects global growth of 2.6 percent in 2024, with variations such as 2.1 percent in the United States, 4.8 percent in China, 0.9 percent in the Eurozone, 0.6 percent in the United Kingdom, and 6.3 percent in India. 

Morgan Stanley forecasts global growth at 2.8 percent in 2024, including 1.9 percent in the United States, 4.2 percent in China, 0.5 percent in the Eurozone, -0.1 percent in the United Kingdom, and 6.4 percent in India. 

UBS anticipates global growth of 2.6 percent in 2024, with projections like 1.1 percent in the United States, 4.4 percent in China, 0.6 percent in the Eurozone, and 0.6 percent in the United States, along with 6.2 percent in India. 

Barclays predicts global growth of 2.6 percent in 2024, encompassing 1.2 percent in the United States, 4.4 percent in China, 0.3 percent in the Eurozone, 0.1 percent in the United Kingdom, and 6.2 percent in India. 

This array of forecasts underscores the substantial variance among banks, particularly regarding the performance of the American economy, ranging from 2.1 percent to 1.1 percent. This discrepancy is attributed to the prevailing uncertainty in the United States concerning interest rates. 

Adding to the prevailing apprehension, six out of ten respondents to the World Economic Forum’s latest Leading Economists’ Outlook report perceive the global economic outlook as “poor” and anticipate “general conditions to weaken over the next year.” 

Expected Inflation Rates for 2024 

The banks share similar projections for 2024 regarding both headline and core inflation (excluding food and fuel prices) in the United States. This consensus sets the stage for a coordinated global effort to address inflationary pressures. The anticipated figures are as follows: 

Goldman Sachs: Predicts a headline inflation rate of 2.40 percent and a core inflation rate of 2.6 percent. 

Morgan Stanley: Forecasts a headline inflation rate of 2.10 percent and a core inflation rate of 2.7 percent. 

UBS: Anticipates a headline inflation rate of 2.70 percent and a core inflation rate of 2.7 percent. 

Wells Fargo: Projects a headline inflation rate of 2.50 percent and a core inflation rate of 2.6 percent. 

Barclays: Envisions a headline inflation rate of 2.70 percent and a core inflation rate of 2.6 percent. 

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Federal Reserve 

The Federal Reserve made significant progress in reducing inflation in 2023 while sustaining growth in the U.S. economy. Despite recent decreases in inflation, interest rates are currently at a historic high. Economists anticipate that the economic consequences of the Federal Reserve’s tightening monetary policy measures will intensify in 2024. 

Investors are hopeful that the Fed can guide the U.S. economy to a so-called soft landing and prevent a severe recession in 2024. Unfortunately, inflation remains well above the Fed’s long-term target of 2 percent. This has led to a division among experts regarding whether the Fed has merely postponed an inevitable recession. 

The Federal Reserve itself anticipates that its monetary policy tightening measures will impact U.S. economic growth in 2024. Recently revised economic forecasts no longer predict a recession in the United States. While the risk of a severe recession in 2023 has decreased, economists and analysts expect interest rates to remain elevated for a longer duration than initially hoped by optimistic Americans. 


In the Eurozone, expectations are that the economy will sidestep a technical recession and recover in the next year. The European Commission foresees overall growth reaching 1.2 percent in 2024 and accelerating to 1.6 percent in 2025. 

 “Economic activity is expected to gradually recover as consumption recovers on the back of a steadily strong labor market, sustained wage growth and continued decline in inflation,” the commission said.  

However, the commission has lowered growth expectations for the twenty Eurozone countries for 2023 to 0.6 percent, compared to 0.8 percent in September. This adjustment is due to the greater-than-expected impact of high inflation, elevated interest rates, and weak external demand. 


International financial institutions generally converge on expectations for China’s economic growth. The country is experiencing a significant decrease in foreign direct investment, putting pressure on its currency, the yuan. The World Bank predicts a slowdown in China’s economy next year due to ongoing domestic challenges, revising its growth forecast to 4.4 percent in 2024, down from the 4.8 percent expected in April. Notably, the Chinese real estate sector continues to weaken.  

The IMF also expects a slowdown in the world’s second-largest economy, with GDP growth possibly slowing to 4.6 percent in 2024, attributed to persistent weaknesses in China’s real estate sector and subdued external demand. This is an improvement from the IMF’s October forecast of 4.2 percent in the World Economic Outlook Report. 

Middle East and North Africa 

Turning to the Middle East and North Africa, the IMF’s expectations for economic growth in 2024 will likely undergo a new review, especially after developments in Gaza. The fund initially projected economic growth to accelerate to 3.4 percent in 2024, up from a slow growth of 2 percent in 2023. 

However, the World Bank warned that the conflict between Israel and Hamas in Gaza could result in a global economic shock, including a potential rise in oil prices to $150 a barrel and widespread hunger due to escalating food prices. The crisis has the potential to echo the 1973 war when Arab OPEC member states imposed an oil sales embargo on the United States in response to Washington’s decision to resupply the Israeli army.  

In conclusion, analysts and economists paint an unclear picture of the future of the economy in the coming year, overshadowed by rapid and unpredictable developments. Many expectations for the current year were not realized due to geopolitical shocks and tensions, reshaping the economic landscape for the future. 

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