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Global Economic Outlook

updated 11 April 2024

Global GDP forecast unchanged this month as growth expectations stabilize 

The Conference Board's global real GDP forecasts for 2024 and 2025 were unchanged in April. We continue to project that the Global Economy will grow by 3% this year and by 3.1% in 2025.  

Growth trends in Mature Economies are stabilizing well below the pre-pandemic average  

Our growth forecast for the Mature Economies ticked up 0.1 to 1.5% for this year, while 2025 was unchanged at 1.6%. Following a growth rate of 1.5% in 2023, the expansion rate in mature economies is stabilizing well below the 2.1% GDP growth average in the pre-pandemic decade.

Forecast revisions for US real GDP growth in 2024 continued to increase in April. This month’s update added another 0.1%, lifting the forecast to 2.2%. Our 2025 forecast was unchanged at 1.5%. The US economy entered 2024 on strong footing, but headwinds, including rising consumer debt and elevated interest rates, will weigh on economic growth. While we do not forecast a recession in 2024, we do expect consumer spending growth to cool and for overall GDP growth to slow to under 1% over Q2 and Q3 2024. Thereafter, inflation and interest rates should gradually normalize, and quarterly annualized GDP growth should converge toward its potential of about 2% in 2025.

Our projections for real GDP growth in Europe are unchanged this month. We anticipate a moderate uptick to 0.7% this year, followed by a more significant acceleration to 1.5% in 2025. The Euro Area endured a recession in the second half of last year as high energy costs and tight monetary policy weighed on economic activity. The Euro Area manufacturing PMI index has lingered in recessionary territory this year and deteriorated again in March, contrasting with the positive trends observed in other major developed economies. Services activity is improving, but the risks to the outlook remain tilted to the downside. We also forecast a modest rebound in UK GDP growth this year. However, unlike the Euro Area, economic indicators suggest potential upside risks to our forecasts. In both regions, our projections of improved growth hinge significantly on expectations of substantial rate cuts within the next two years.

For Japan, we still expect 1% real GDP growth this year and 1.4% in 2025. However, the forecast masks an improvement this year following a contraction in the third quarter of 2023 and only a mild rebound in Q4. After a disappointing -1.4% rate of growth in the second half of last year, we expect annualized quarterly growth rates to average 2% in 2024. A key driver of the improving trend is a significant fiscal stimulus package the government announced last year, which includes tax cuts and transfer payments to lower-income households. The second driver is a pick-up in exports, boosted by the 20% depreciation of the Japanese yen since the start of 2022. However, we do not expect that growth spurt to last. In March, the Bank of Japan raised interest rates for the first time in 17 years. Compared to the GDP-weighted Developed Market average of 4.4%, Japanese monetary policy rates at 0.05% are hardly restrictive. Yet, further increases may reverse the yen weakness, push up longer-term bond yields, and restrain more interest rate-sensitive business and household spending.  

Our forecasts for Other Mature Economies improved modestly to 2% in 2024, up from 1.9% in March. Expectations for 2025 remained unchanged at 2.3%. The slight change was driven by volatility in our Israel forecast. The problem is assessing the economic impact of the ongoing war with Hamas. Consumer confidence fell sharply last October/November in reaction to the terror attacks, and Israel’s economy contracted at an annualized rate of -21% in the fourth quarter. Sentiment did not deteriorate further, and the economy’s manufacturing PMI is pointing to a modest improvement in industrial activity. As a result, we raised our GDP forecast for 2024 to -0.7% from -1.8% in March and left 2025 unchanged at 3.8%, which assumes a more robust rebound following an end of the conflict at some stage this year.  

Our forecast for growth in Emerging and Developing Economies is also settling around a more stable trend  

Signaling an end to the extreme volatility in GDP growth since the 2020 pandemic shock, overall GDP growth in Emerging and Developing Economies is expected to look more stable in the next two years. Following last year’s 4.5% pace, we forecast 4.3% real GDP growth for this year and 2025.   

After significantly upgrading our China and India forecasts in March, our projections for Developing Asia remained unchanged this month. We still forecast a moderate downward trend in real GDP growth from last year’s 5.6% rate to 5.2% in 2024 and 4.9% in 2025.

We still believe China will undershoot the government’s “around 5%” growth target this year and resume the gradual slowdown in annual growth rates that was underway before the pandemic. Meanwhile, robust economic data in the first quarter supported the major upward revision to our India forecasts last month. That allowed us to leave our forecasts unchanged at 7.1% for 2024 and 6.4% in 2025. Finally, with no changes in growth expectations for Asia’s two largest economies, estimates for the ASEAN Economies also remained unchanged at 3.5% for this year and 3.6% In 2025.

This month's most noticeable forecast changes affected the Middle East & North Africa region, where we raised growth expectations due to the upward trend in oil prices. Forecasts for Russia, Central Asia & Southeast Europe, Latin America, and Sub-Saharan Africa saw only minor changes.

Key risks to the global economic outlook remain tilted to the downside

Inflation persistence remains at the top of the list of downside risks to the global growth outlook. Our GDP-weighted Developed Market CPI inflation average has remained at 2.9% for the past two months, indicating that further progress towards the coveted 2% target is becoming more difficult. That could delay the widely expected start of rate cuts among the major developed market economies. The renewed rise in oil prices moved commodity prices back into the spotlight as drivers of global inflation. In addition, inflation pressures may remain higher due to ongoing labor shortages and other factors, including deglobalization, the cost of financing the energy transition, and the lack of housing supply.

Note: Since October 2022 The Conference Board uses official Chinese GDP data in our global aggregation which led to an upward revision of the global aggregate growth rate. The alternative figures for China that we used before were lower, and hence our global aggregate was also lower. The change from using official GDP data as our main series for China is made for several reasons including: lack of up-to-date data that constrain the tracking of our alternative GDP measure on a timelier basis; lack of detailed data to perform the necessary calculations as described in the original methodology; and biases in official GDP data appearing smaller in earlier years. We continue to track alternative GDP data for China but will do so on a less frequent basis.

For questions or comments, please email ted@conference-board.org

 

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