Global Economic Expectations 2024: Fastest-Growing Economies
We are on the verge of entering 2024 in just a few days. If we talk about 2023, it was a bit more than uncertain in the economic landscape. We witnessed a series of wars that shook the economic outlook. There was a sharp slowdown in Europe, blamed on regional energy shocks. China is still struggling with its property crisis and, of course, not to forget the rising fed rates. There were a lot of lows and a few highs in 2023, but still, the rally at the end of the year fabricated a hope of 2024. But here's the question- will the economy recover in 2024?
Key Highlights
The world economy will perform better than expectations in 2024.
The beak economy around the world will try their best to avoid recession.
Core inflation will cool down in 2024, and Central banks will cut down interest rates.
Will the Economy Get Better in 2024?
If you look at global economic growth predicted by the World Economic Forum, it will slow down even more in 2024. The reasons behind the slow movement are high-interest rates, increasing energy prices, and a slowdown in the world's top economies. Also, the wars in Ukraine and the Middle East can contribute to a worsening global financial outlook. If any other geo-political risk arises, it may even worsen this situation. However, economists agree that the world economy might not fall into recession. Still, Europe and the UK may highlight the possibility of a mild recession.
It is even hard to predict the future of the world economy because the Federal Reserve has shown uncertainty over its interest rates. On the other hand, if you look at China's market, it may expect slow growth because companies are looking for other cost-efficient locations for manufacturing. On the bright side, Goldman Sachs sees an optimistic picture. It says the global economy may outperform or do better than expected because the GDP growth and employment are steady in major economies facing extreme inflationary pressures.
Major Transformations the World Economy Might Witness in 2024
The world economy will witness three significant scenarios in 2024
Major Elections 2024
About 50 countries will have elections in 2024, but the four significant elections will significantly impact the global economy. Elections in Geo-political events majorly affect global businesses and shape policies and priorities.
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The United States: The United States will have a consequential election in 2024 where Joe Biden will fight for his second term against former President Donald Trump. Donald Trump has been alleged to have eroded by partisan, polarisation, misinformation, voter suppression, and an attack on the integrity of the electoral system.
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India: Another pivotal election will held in India, where Prime Minister Narendra Modi will fight for a third term in office. These elections will determine whether Narendra Modi will consolidate his power and agenda or whether the opposition party with an alternate vision for the country, will surpass him. The Modi government has made an effort to monitor fake news on social media, and this might lead to censoring democracy.
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Indonesia: Indonesia will test its democratic resilience and its role in South Asia, where outgoing president Joko Widodo, who has served Indonesia for about ten years, will step aside from where his legacy will be transferred to his defense minister Prabowo Subianto. Here, Indonesian elections are important because it is a very young and untested democracy. Joko Widodo's successor has already generated controversies on all sides.
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Taiwan: Taiwan will also have its democratic election, which China sees as its sovereign territory. It is also a center point for US-China relations. Taiwan is continuously seeking pressure from China and other opposition parties. This time, a major interference from China is expected during elections in Taiwan.
Inflation Prediction 2024
Inflation, which is an essential dynamic in 2024, will significantly affect the exchange rate, interest rate, asset prices, income distribution, and debt sustainability of many countries. Inflation, which will fluctuate across countries and regions, will be a core point of discussion in 2024. According to the International Monetary Fund, global inflation is projected to be around 5.8% in 2024, while core inflation might not return to expected target levels of about 2% until 2025. However advanced economies are expected to see less than 3% inflation in 2024. The United States, on the bright side, will see the lowest inflation numbers all over the world; however, the United Kingdom and the Eurozone may counterbalance it.
Shortage of Workers
Consumer spending will reduce in 2024 because consumers have heavily relied on savings accumulated during the pandemic. Pandemic-era savings are diminished, especially for those who need them the most, and credit card balances have risen sharply. This means consumers will have no more debt themselves in 2024. On the other hand, a shortage of workers will also slow down the economy because job openings will remain far behind the number of unemployed workers. The economy has yet to absorb the impact of high interest rates, and these high-interest rates will further drag the economy down.
Which Is the Fastest-Growing Economy in the World in 2024?
The fastest-growing economies in the world in 2024 are
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Macau SAR: If you look at the fastest-growing economies in 2024, Macau SAR will have a 27.2% GDP growth rate in 2024, falling in the Asia Pacific region. The reason behind this growth is that Macau's economy mainly depends on the tourism industry, which represents 60% of the region's jobs and about 70% of its GDP.
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Guyana: Guyana might have 26.6% of GDP growth in 2024 and will represent the second fastest-growing economy in 2024. It was the fastest-growing economy last year, having a 62% increase in GDP, and will reclaim its title with an expected growth of 37%. If you look at the reasons behind this growth, they are- rising oil exports to other major countries. As of now, Guyana has 11 billion barrels of oil reserves. Take a look at the IMF projection. You will find that the majority of the Sahara-African countries will be in the top 15 to be the world's fastest-growing economies.
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India: If you look at the world average GDP growth, it is forecasted to be around 2.9%. On the bright side, if you look at India's GDP growth for 2024, it is about 6.3%. If you compare this growth with China's, China stands in second place behind India, having a GDP growth rate of 4.8%. It highlights that in 2024, India will shine in all the major economies as it is also projected that India's GDP will exceed Japan's and make it the second-largest economy in the Asia Pacific region.
This will ultimately help in India's robust economic growth, which will boost demand, thanks to India's IT sector, which is a significant contributor to its GDP. If the demand rises in the country, it will also help India maintain its industry balance in the cement and steel sector, which will also add new capacity. If you look at India's structural demand, the supply side reform by the government and good corporate and bank balance sheets will also increase. Considering India's economic growth, even the International Monetary Fund expects India to remain strong as it has supported microeconomics and financial stability.
What Will the Global Economy Be Like in 2024?
The global economy will be somewhat different in many ways in 2024
Global Inflation
Inflation has negatively impacted the economy in 2023. However, it has reduced to some extent than expected. Goldman Sachs has estimated a 2.2% annualized core inflation rate in the US, Europe, and other emerging markets. And if we look at 2024, inflation in these economies will somewhat reach the target set by the major Central banks, which will make a return to normalcy in 2024.
Factors Driving Inflation Down in 2024
Food, energy, reasonable global prices, and monetary policies are a few common factors that will help reduce inflation worldwide. However, the eurozone is expected to see faster inflation reduction due to the labor market reducing the pressure compared to the United States and the UK. There are other contributors to inflations, like an increase in housing costs, especially in the USA, where consumer prices rose to 3.1% in November 2023. Russia's invasion of Ukraine in 2022 even contributed to an increase in commodity prices, which caused inflation to reach its peak in October 2022, especially in the eurozone.
Supply Chain and 2024 Outlook
The supply chain has been destroyed mainly due to the Ukraine war. Still, it is now normalizing, contributing to decreasing inflation. The supply chain can significantly improve in 2024, reducing inflation to an average level.
Monetary Policy and Economic Growth
Due to a decrease in inflation and a slowdown in economic growth, the major economies in 2024 may even reduce the rates. The Federal Reserve has already signaled that it will potentially cut the interest rate. In contrast, Bank of America has projected that 150 global Central Bank may cut interest rates in 2024, making the highest cut since 2009. Here, the slow global economic growth in 2024 is predicted compared to 2023.
Conclusion
Will the economy recover in 2024? This is the foremost question we have as we enter 2024. Economists around the world have forecasted the economic growth of 2024. They have even predicted the challenges and opportunities available for major countries. The global economy has already witnessed uncertainty, energy shocks and rising interest rates in 2023, and governments worldwide have done their best to keep the economy in a stable position. Well, now it is the time for countries to grow, but still, there is a lot left to recover.
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