February 21, 2024

The Forward View – Global: February 2024

Rate cuts expected in 2024 but inflation path remains uncertain


  • While inflation has slowed considerably from its peaks (particularly in advanced economies (AEs)), disinflation stalled at the end of 2023. Disruptions to trade activity, due to attacks against shipping in the Red Sea, has introduced new uncertainty around the path of inflation this year.
  • That said, with policy rates at restrictive levels, growth weak (or expected to slow in the case of the US) and significant progress in bringing inflation close to central bank targets, rate cuts by the major advanced economy central banks are expected in 2024 (ex. Japan).
  • Growth in the United States has continued to outperform other advanced economies, with the Euro-zone, UK and Japan at, or near recession, at the end of 2023. Restrictive monetary policy and fiscal contraction is anticipated to drive subdued growth across AEs this year.
  • Slower activity in AEs will constrain demand for emerging market produced goods. An uptick in Chinese export volumes in late 2023 saw EM exports edge higher, albeit this coincided with a steep fall in China’s export prices.
  • Overall, we expect the global economy to expand by 2.8% in 2024 (up from 2.7% previously), reflecting stronger than anticipated growth in the US providing a higher base for growth this year. Despite this revision, this would still be the weakest rate of growth since 2002 (excluding the extreme outliers of the Global Financial Crisis and the initial wave of COVID-19). We continue to anticipate a modest improvement in 2025, up to 3.0% – but for growth to remain below its long- term average (3.4% between 1980-2022).
  • There remain a range of uncertainties. Should the pause in disinflation continue, this could delay policy rate cuts (impacting 2025 growth). Geopolitical tensions remain, including the Russia-Ukraine war, Middle East conflict and US-China tensions.

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