Economists are pessimistic for 2024
According to economists, the continued rise in interest rates in major economies means that global growth, which beat expectations in 2023, will slow next year.
Assessments shared by forecasters of global financial institutions show that the economy will perform poorly in 2024.
Economists also believe that high demand will keep inflation high for a longer period of time, which will keep interest rates high in advanced economies.
Until a few months ago, the Federal Reserve was expected to start lowering interest rates in 2023. However, the strength of the US economy pushed the forecasts back. Economists now expect the first rate cut to take place in the spring of next year.
High interest rates are expected to negatively affect economic activity and increase unemployment.
‘Growth will slow’
According to the sum of the forecasts of the consultancy Consensus Economics, production will increase by 2.1 percent in 2024. This means that the economy will exceed the growth rate of 2.4 percent expected for this year.
Simon MacAdam, senior global economist at Capital Economics, said part of the slowdown in 2024 will be the result of “some fundamental arithmetic effects.” MacAdam asserted that the economy will remain weak in 2024 and will remain strong in 2023.
CITI: WEAKNESS IS LEADING TO NEXT YEAR
Nathan Sheets, chief economist at US bank Citi, said: “Demand for services hasn’t slowed to a great extent, the job market has remained strong and wages have continued to rise. “Some of the projected weakness for this year extends into 2024.”
Sheets said that there will be recessions in many countries, including the United States, but that this recession will come later than expected.
MOODY’S: INTERESTS WILL REMAIN HIGH
Mark Zandi, chief economist at Moody’s Analytics, said the US economy is likely to avoid a recession this year, adding that the Federal Reserve will keep rates high longer to fully suppress inflation, which will mean slower growth in 2024.
Zandi said the European economy, apart from Germany, had a slightly better year than feared, adding that this increased the likelihood that European and British central banks would keep interest rates high.
FEAR OF CHINA
China’s economic slowdown following the post-pandemic recovery has also added to economists’ pessimism about 2024. Christian Keller, head of economic research at Barclays, called the country’s slowdown “structural.”
Keller affirmed that the problems of the Chinese economy will affect the global economy, saying: “The direction seems right for a global slowdown in 2024.”