Growth

The global economy remains on track for a soft-landing. Global growth is forecast to average a 3.2% pace in 2024 & 2025, close to the outturn seen in 2023, but ½ percentage point below that seen in the decade prior to COVID
Increased convergence is expected across advanced economies in 2025, with the UK and Euro area gradually recovering and the US beginning to moderate from the strong growth seen in 2023
Despite a recent ramp-up in stimulus measures, growth in China is expected to remain under pressure, with a further slowdown expected in 2025

Inflation

Lower gasoline prices are helping to place downward pressure on headline inflation rates, although this source of disinflation should gradually fade
Core goods inflation has returned to more sustainable rates, but core services inflation remains too high across most economies
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 late 2025

With inflation concerns easing, central banks are becoming more focused on the upside risks to unemployment
Major central banks have commenced their easing cycles and will continue with rate cuts in Q4 of 2024 & 2025 towards more neutral levels. However, policy rates will remain much higher than in the decade prior to COVID
QIC expects a further 175bps of rate cuts by the US Federal Reserve, 125bps by the European Central Bank and 175-200bps by the Bank of England over the coming 1-2 years
The Bank of Japan is expected to continue to slowly lift rates over the coming year

Source: Refinitiv, QIC. Note: Red columns represents QIC forecasts

Risks around inflation outlook are becoming more balanced.

Source: Refinitiv, QIC. Note: Grey shading represents QIC forecasts

Most central banks have commenced their easing cycle over the past six months
The Federal Reserve cut rates by 50bps in September and QIC expects a further 175bps of easing over the coming 18 months (two 25bp rate cuts in November and December, a further four cuts in 2025 and one cut in 2026).
Following the ECB’s cut in June and September, QIC expects a further two cuts in Q4 of 2024 and three cuts in 2025
The Bank of England cut rates by 25bp in late July and QIC expects a further 175-200bps of rate cuts proceeding at a quarterly pace
The Bank of Japan is forecast to continue to gradually lift rates over the coming year

Source: Refinitiv, QIC. Note: Grey shading represents QIC forecasts; Data and forecasts as at 30 September 2024.

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