Global economy sees turnaround in 2024 with easing inflation, policy shifts
Date
12/29/2024 7:20:23 AM
(MENAFN) At the start of 2024, economic challenges in major advanced economies shaped a bleak global outlook. A sharp slowdown in the US, underwhelming growth in China, and ongoing stagnation in Europe set a pessimistic tone, with global growth projections beginning at 2.7 percent—just above the 2.5 percent threshold often associated with a global recession, according to QNB's economic commentary.
The first half of the year brought unexpected developments, as both economic activity and inflation exceeded expectations worldwide. This resurgence fueled a temporary "inflation scare," creating uncertainty about the trajectory and direction of policy rates. However, inflationary pressures were tied to lagging factors, such as housing costs. Over time, labor markets softened gradually while remaining stable, and inflation eased, shifting sentiment and improving the outlook in the latter half of the year.
Lower inflation paved the way for significant monetary policy adjustments. The US Federal Reserve (Fed) reduced policy rates by 100 basis points (bps) to 4.5 percent, and the European Central Bank (ECB) followed suit with a 100-bps cut to 3 percent.
By year-end, the global economy was characterized by moderate growth of 3 percent, declining inflation in most advanced economies, and substantial monetary policy easing, contributing to a more optimistic economic landscape.
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