The Economist Intelligence Unit (EIU) has increased its 2024 global real GDP growth prediction from 2.4% to 2.5 percent. According to this modification, growth would not drop starting in 2023 but will instead be constant. The London-based company ascribes this resistance to geopolitical threats and rising interest rates.In addition to upward adjustments for several European economies, which lift growth in the euro area to 1% from 0.8% and for Brazil to 2.1% from 1.8%, the EIU’s update shows an upward adjustment for US growth in 2024 to 2.2% from the previous 2%.Additionally, the EIU has lowered the expected monetary easing in its outlook for future monetary policy. In particular, it has eliminated a 25 basis point decrease from the US Federal Reserve’s and the European Central Bank’s 2024–25 loosening cycles. On the other hand, the EIU now anticipates that the Bank of England will lower interest rates sooner than anticipated, bringing its rate down from its initial forecast of 4.25% to 3.5% by the end of 2025.As alliances become more rigid and rival blocs emerge, geopolitical considerations are predicted to cause the global economy to become more regionalized and fragmented between 2024 and 2028. This trend is likely to drive businesses toward less effective supply chains, exacerbate trade disputes in key industries, and make competition more difficult in the global marketplace. It is also likely to be accompanied by the reintroduction of industrial policy, sanctions, and new incentives. Growth potential is anticipated to be hampered by these trends; according to the EIU, global real GDP will rise by an average of 2.8% per year over the next five years, which is less than the 3% average of the 2010s.However, despite rising interest rates and foreign turmoil, the world economy is demonstrating resilience in the short run. The US economy’s solid performance, which is fueled by stable household finances, rising manufacturing investment, and a thriving technology sector, is largely to blame for this resilience. The forecast for other regions is less promising, but Europe is predicted to pick up steam gradually in 2024, and China’s economy is recovering from a fall in real estate thanks to moderate government assistance. A recovery in international commerce and robust demand for commodities will help emerging nations, but they will still have to contend with the high cost of debt servicing and a strong US dollar.
