In 2024, global economic growth is expected to stabilize at 2.6%, offering a sense of relief after several years of instability caused by numerous negative shocks. This marks the first time in a while that we see a level of growth that isn’t sharply declining. Key factors contributing to this stabilization include careful adjustments in monetary policy and a decline in inflation rates across various economies. Despite these improvements, the World Bank reports that 80% of the global population will experience slower growth compared to the period before the COVID-19 pandemic. This ongoing slow recovery is still evident as many regions struggle to regain the momentum lost during the health crisis.
One of the major challenges to global economic recovery continues to be the ongoing trade tensions, particularly between the United States and China. These tensions, characterized by tariffs and strained diplomatic relations, continue to impact global supply chains and dampen business investment. The unpredictability of trade policies, such as those introduced under former President Trump, has created an environment of uncertainty that has made businesses hesitant to expand and invest in new markets.
Moreover, the Organization for Economic Cooperation and Development (OECD) has adjusted its U.S. growth forecast for 2025, lowering it to just 1.6%. This downward revision reflects the lingering effects of tariffs imposed during the trade wars. These trade policies have had a significant impact not just on bilateral relations between the U.S. and China, but also on the wider global market, as other countries are often caught in the crossfire. The tariffs have made many products more expensive, and the uncertainty surrounding future trade deals continues to discourage investment and stifle global supply chains.
However, despite these risks, there are signs of optimism. Inflation, which had been a significant concern for many economies, is finally showing signs of stabilization. The controlled easing of monetary policies by central banks, particularly in advanced economies, has helped curb inflationary pressures that had been squeezing consumers and businesses alike. This shift has provided some room for economic activity to pick up again, though it remains to be seen whether this growth will be sustainable in the long term.
The future remains uncertain, especially with the backdrop of geopolitical risks, environmental challenges, and the potential for new economic disruptions. Nonetheless, global economic stabilization remains a key goal for policymakers around the world, and the coming months will be crucial in determining whether this period of relative calm can endure.
