Global Focus 2024 – A soft landing, with risks
Inflation and geopolitics pose biggest threat to global soft-landing scenario.
London – Standard Chartered (“the Bank”) expects global GDP growth to slow marginally to 2.9% in 2024 from 3.1% in 2023. As a result, the world economy should be able to achieve a soft landing after the most aggressive monetary tightening cycle in years.
This year’s Global Focus publication, which looks ahead at some of the key economic trends to come in 2024, argues that the lagged impact of aggressive central bank tightening is likely to be felt most acutely in developed economies, where the Bank sees average growth slowing to around 1.2% in 2024. In contrast, Asia’s growth should slow only slightly to 4.9%, making it the world’s fastest-growing region. While China’s growth may remain lacklustre, improving exports and tourism should drive stronger recoveries in some Asian economies; in India, the Bank expects a post-election growth pick-up.
Regional growth should improve in the Middle East and Africa, with Saudi Arabia and the UAE continuing to focus on economic diversification. That said, Standard Chartered is forecasting a new all-time high in global oil demand.
Lingering inflation and geopolitical developments are risks to the global soft-landing scenario. The military conflicts in the Middle East and Ukraine, ongoing US-China tensions, and the November 2024 US election are key sources of geopolitical and political risk; they come against a backdrop of increasing global fragmentation.
On the inflation front, while a cyclical easing of price pressures is now taken for granted, it is unclear whether inflation can slow on a sustained basis. Core inflation has remained sticky in some markets, signalling persistent underlying pressures. Structural factors – including higher fiscal deficits, the cost of the climate transition and recent under-investment in fossil fuels – could keep inflation higher than during the pre-COVID period. Oil prices and geopolitical conflict are also sources of upside inflation risk.
Standard Chartered differs from consensus forecasts in several areas. For the Euro area, it believes that 2025 growth will be 1.2% versus 1.5%, given the lingering effects of restrictive monetary policy on household mortgages and firms’ financing costs, particularly in H1-2025. Similarly in the UK, the Bank forecasts in 2024 of 0.1% versus 0.4%; this reflects an expectation of stagnant growth in H1 and a return to modest growth once rate cuts start in Q3.
In China, the Bank is maintaining its 2024 growth forecast at 4.8%, slightly above market consensus. It expects the government to set a growth target of around 5% for 2024, the same as 2023, in an attempt to narrow the negative output gap and prevent deflation expectations from becoming entrenched.
Razia Khan, Chief Economist, Africa and Middle East, commented: “In an increasingly fragmented world, there are no obvious new drivers of global growth gains. Soft landings have been rare after significant monetary tightening cycles in the past, raising questions about the sustainability of recent market rallies, with geopolitical risks elevated, and the US election the key political risk event for markets in the coming year.”
– Ends –
For further information please contact:
Shaun Gamble
Group Media Relations
Standard Chartered
+44 7766 443662