The global economy has witnessed a sustained period of resilient growth as it enters the second half of 2024, driven by falling inflation and better-than-expected employment and private consumption. Short-term growth prospects, however, will be undermined by a still-high interest rate environment, while a potential cooling down of the labour market and growing political uncertainty will affect global business and consumer confidence.
In Euromonitor International’s Q3 2024 baseline forecast, global real GDP growth is expected to reach 3.0% in 2024 and 3.1% in 2025. Global inflation will ease to 6.6% in 2024, before it moderates further to 3.9% in 2025.
Growth momentum expected to soften in advanced economies
Developed economies witnessed stable but stagnant growth in the first half of 2024, on the back of moderating inflation and sustained employment and consumption, while interest rates remain high.
Real GDP growth in advanced economies is expected to stay at 1.6% in 2024 and 1.7% in 2025, around the same level as in 2023
Source: Euromonitor International
In the US, positive growth momentum was maintained in H1 2024, leading to a further upgrade in its real GDP growth forecast to 2.3% in 2024. However, a cooling labour market, persistent service prices inflation, high consumer debts, and political uncertainty rising around the upcoming November election will weigh on US economic growth during the second half of 2024 and 2025.
The Eurozone economy saw a slightly better-than-expected performance in H1 2024 owing to falling inflation and stronger exports and tourist arrivals, but economic recovery remains weakest among key economies, with real GDP growth being estimated at 0.9% in 2024 and 1.5% in 2025. Faster growth in domestic consumption and a solid performance of the tourism sector have supported the economic recovery in southern Europe and France. Meanwhile, the German economy – the largest in the Eurozone – continues to struggle to rebound on the back of both structural weaknesses and cyclical headwinds.
With real GDP growth forecasts reaching 4.2% in 2024 and 4.1% in 2025, emerging and developing economies will continue to outperform advanced countries.
Growth predictions for China, India and Brazil are revised slightly upward, reflecting the stronger economic activity in H1 2024, particularly in private consumption and exports
Source: Euromonitor International’s Q3 2024 baseline forecasts
The outlook for emerging economies, however, is subject to downside risks amid a slowing global economy and ongoing domestic challenges. Despite some efforts to stabilise the real estate market, the Chinese economy continues to suffer from weak property investment and sales, while subdued consumer demand weighs on private consumption. As of July 2024, China’s official Manufacturing Purchasing Managers Index (PMI) remained below the 50-point threshold for three consecutive months, indicating weakening economic activities in the near term. China’s real GDP is forecast to grow at 4.8% in 2024, before it slows down further to 4.3% in 2025.
Global disinflation is slowing, while upside risks to inflation rise
The global disinflation process continues, but inflation is falling at a slower pace compared to in 2023. Some price pressures are persistent, including those from the services sector and wage growth. In some emerging and developing countries, a strong US dollar adds pressures to the cost of energy, food and other imported commodities. In Euromonitor’s Q3 2024 baseline forecasts, global consumer price inflation is expected to ease to 6.6% in 2024, before seeing a major drop to 3.9% in 2025. Excluding Argentina, global inflation will be at 4.9% in 2024 and 3.4% in 2025.
Meanwhile, upside risks to inflation are rising on the back of accelerating trade and geopolitical tensions, as well as growing policy uncertainty due to political upheavals in some parts of the world. Any escalation of the ongoing wars and conflicts could result in higher global commodity prices and a resurgence of global inflation. Sticky inflation and the risk of resurging inflation may hinder central banks from making bolder steps in cutting interest rates in H2 2024 and 2025. Going forward, however, a gradual cooling of the labour market and slower economic activity should support the global disinflation trend.
Various downside risks can change the global baseline outlook
Growth prospects for the global economy continue to be surrounded by uncertainty and multiple downside risks. Global risks can come from three major factors: the rise of geopolitical conflicts including geoeconomic competition, existing macroeconomic headwinds, and climate change impacts. Political uncertainties from ongoing elections, including in the US election, also add to the existing geopolitical and economic risks. The global economy, therefore, faces a range of alternative outcomes beside the baseline outlook, as reflected in Euromonitor International’s Q3 2024 scenario forecasts.
A deepening Global Fragmentation remains the most impactful downside scenario to the global economy in Q3 2024 based on Euromonitor’s Global Risk Index. In this scenario, the global trade landscape becomes increasingly disrupted and fragmented due to escalating geopolitical tensions, thereby reducing efficiency, raising costs and slowing global growth. Global real GDP could therefore grow slower, by 0.7-0.8 percentage points each year during 2025-2026 compared to the baseline.
Learn more about the global economic outlook in Q3 2024 and the impacts of different macroeconomic scenarios in our full report, Global Economic Forecasts: Q3 2024.