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Global Outlook

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Growth

  • Global economy remains on track for a soft-landing, although growth to remain sluggish in 2024 at around 3.2%
  • Increased convergence expected across advanced economies, with the UK and Euro area gradually recovering and the US beginning to moderate from the strong growth seen in 2023
  • Growth in China on track to hit the authorities' 5% target, buoyed by a roll-out of policies to arrest the decline in the property market

Inflation

  • Core goods prices continue to ease, but core services inflation remains too high across most economies
  • A modest increase in unemployment is expected to place downward pressure on wage growth, helping to ease core services inflation
  • Inflation pressures to continue to trend lower, but the last-mile lower will be bumpy and inflation is not expected to fall sustainably to target until 2025

Monetary Policy

  • Major central banks to lower rates in 2024, but policy rates to remain much higher than seen in the decade prior to COVID
  • QIC expects two cuts by the US Federal Reserve and Bank of England in 2024, while the European Central Bank is expected to cut rates three times this year
  • The Bank of Japan is expected to continue to slowly lift rates in 2024


Global Outlook highlights:


Modest growth to continue across the global economy

Pace of global growth in 2024 & 2025 to be similar to 2023 outturn, but still below the pre-COVID trend

 

World - Real GDP growth (% annual average, PPP basis)Source: IMF, QIC. Note: Red columns represents QIC forecasts

 

Inflation to fall to most central bank targets by late 2025

The surprise pick-up in inflation momentum in the US during Q1 2024 is set to fade

 

CPI Inflation (quarterly, %y/y)Source: Refinitiv, QIC. Note: Grey shading represents QIC forecasts
Core CPI inflation (quarterly, %y/y)Source: Refinitiv, QIC. Note: Grey shading represents QIC forecasts

 

Central banks to gradually ease over the coming two years

Moderating inflation to allow Central Banks to lower rates to more neutral settings

  • Many emerging market economies and a handful of advanced economies have already started their easing cycles
  • QIC expects two rate cuts by the US Federal Reserve in H2 2024 (September + December) and a further four cuts in 2025
  • Following the European Central Bank's cut in June, QIC expects a further two cuts in H2 2024 and four cuts in 2025
  • QIC expects the Bank of England to cut rates twice in H2 2024 and four times in 2025
  • Japan is forecast to continue to gradually lift rates over the coming year

 

 

Major central bank policy rates (%)Source: Refinitiv, QIC. Note: Grey shading represents QIC forecasts

 

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Global Outlook

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