Positive developments overcame uncertainty in 2024

Doha, Qatar: Early in the year, economic weakness across major advanced economies dominated the global macro agenda. A rapid slowdown in the US, disap...

Doha, Qatar: Early in the year, economic weakness across major advanced economies dominated the global macro agenda. A rapid slowdown in the US, disappointing growth in China and continuous stagnation in Europe provided a gloomy environment for 2024, with global growth expectations starting the year at 2.7%, only a touch above the 2.5% mark that commonly defines a global recession, QNB said in its economic commentary.

In H1 2024, both activity and inflation surprised to the upside globally, creating a temporary renewal of the “inflation scare” that contributed to spur significant uncertainty about the path and even the direction of policy rates. However, price pressures were related to lagging factors, such as housing costs. Despite this, labour markets eased gradually and  remained resilient while inflation moderated. This triggered a change in sentiment and led to a turnaround of outlook later in the year.

Importantly, lower inflation justified the beginning of meaningful monetary policy easing cycles. The US Federal Reserve (Fed) cut policy rates by 100 basis points (bps) to 4.5% and the European Central Bank (ECB) cut by 100 bps to 3%.

As a result, the year ended up being defined by a more positive backdrop of moderate global growth of 3% combined with falling inflation across most advanced economies and significant monetary policy easing.

The estimated global growth of 3.1% for 2024 is a significant achievement, particularly given the low expectations early in the year. Importantly, the better than expected performance was broad-based, affecting all major economies, including the US, China and the Euro area.