Global recovery is steady but slow and differs by region
The latest projections foresee the global economy maintaining its course, with growth hovering around 3.2 percent throughout 2024 and 2025, mirroring the pace of 2023. While advanced economies are anticipated to experience a slight uptick, with growth climbing from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025, emerging market and developing economies are expected to undergo a modest deceleration from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. Looking ahead five years, global growth is projected to reach a historic low of 3.1 percent. Inflation on a global scale is predicted to gradually diminish, decreasing from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies attaining their inflation targets ahead of emerging market and developing economies. Core inflation, meanwhile, is anticipated to decline at a more measured pace.
Despite substantial interest rate hikes by central banks aimed at reinstating price stability, the global economy has demonstrated unexpected resilience. Chapter 2 delves into how shifts in mortgage and housing markets during the pre-pandemic era of low interest rates cushioned the immediate impact of policy rate increases. Chapter 3 examines the medium-term outlook, revealing that the projected dip in output per capita primarily stems from persistent structural impediments hindering the efficient allocation of capital and labor to productive enterprises. Chapter 4 elaborates on how subdued growth prospects in China and other major emerging market economies are poised to exert pressure on their trading partners.
