Overview

• Our global CPI inflation estimate accelerated slightly in February – with prices back above 5.2% yoy (compared with 4.8% yoy in January). That said, inflation in advanced economies remained essentially unchanged at 2.7% in February. This is still clearly above central bank targets and upside surprises to inflation data this year (particularly the US) have seen expectations of central bank rate cuts pushed back.
• US growth continues to look solid, although some slowing from Q4 is likely, and this trend is expected to continue over the rest of this year. At the same time, growth for the other major advanced economies looks to have picked up in Q1, after being moribund in H2 2023, and we expect to see modest growth over the rest of this year.
• Business surveys continue to point to relatively robust conditions in emerging markets in early 2024, with the EM composite PMI reaching its strongest reading since May 2023 (and the Indian manufacturing PMI at a 16 year high). Q1 GDP growth in China was higher than expected but masks underlying weakness in domestic demand and we have left our forecast for 2024 unchanged at 4.5%, below the 5% growth target.
• Our view for the global economy is unchanged – we expect global economic growth to slow to 2.9% in 2024, reflecting the lagged impacts of restrictive monetary policy, before growth edges higher to 3.0% in 2025. This modest recovery is expected to continue in 2026 – with growth increasing to 3.1%.
• Geopolitical risks have come to the fore this month, as the risk of a broader Middle East conflict rises. Oil prices have increased by around 10% since the end of February (partly due to OPEC+ supply constraints), and financial market stress indicators have moved higher, but these moves are not large enough to be particularly worrying in themselves. The issue is whether the conflict worsens from here, leading to bigger market moves. Historically a move higher in oil prices would have been looked through by the major central banks but, given the extended period of well above target inflation, they may be more sensitive to a sustained shift in prices this time around.

For further details, please see The Forward View Global (April 2024)