Global Growth to Remain Stagnant at 3.2% in 2024-2025 Amid Diverging Regional Trends
The October 2024 World Economic Outlook Report projects global growth to remain stable yet lackluster, at 3.2% in 2024 and 2025, which is consistent with prior estimates from the July and April 2024 World Economic Outlooks. However, significant revisions have occurred at regional levels.
Growth forecasts for the United States have improved, counterbalancing downgrades for other advanced economies, particularly in Europe. Similarly, emerging markets and developing economies face downward adjustments, largely driven by disruptions in commodity production and shipping, conflicts, and extreme weather events in regions like sub-Saharan Africa and the Middle East.
Despite these challenges, growth forecasts for emerging Asia have been upgraded, bolstered by strong demand for semiconductors and electronics, fueled by investments in artificial intelligence. Even with these shifts, the longer-term outlook remains subdued. Global growth over the next five years is projected at 3.1%, below pre-pandemic levels, with persistent structural barriers such as aging populations and weak productivity curbing potential.
On the inflation front, cyclical imbalances have eased, contributing to declining inflation globally. Headline inflation is expected to drop from 6.7% in 2023 to 5.8% in 2024, with advanced economies hitting their inflation targets sooner than emerging markets. However, risks to price stability remain. While goods prices have stabilized, inflation in services continues to pose challenges, underscoring the need for tailored monetary policy.
The report warns of downside risks to the global outlook, notably from financial market volatility, which could hinder growth, especially in developing nations with large external financing needs. Further disruptions to disinflation, potential spikes in commodity prices, and geopolitical tensions could challenge central banks and fiscal stability. A prolonged downturn in China’s property sector or rising protectionism could exacerbate these risks, dampening consumer and investor sentiment globally.
