Global Outlook 2024: Modest economic growth and instability amid contractionary monetary policies

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The current global economic crisis is different from previous crises due to its different nature; It is not a financial crisis that creates liquidity stress. Instead, it has arisen from a series of factors resulting from the COVID-19 pandemic, which has resulted in a significant imbalance between supply and demand. These imbalances have complicated the normal functioning of markets, leading to the current economic crisis.

Results have been weaker than expected growth and historical price tensions. As a solution, central banks are working to correct the current high inflation and bring it back to their target path of 2% by 2022, maintaining an upward trend in interest rates until unprecedented levels are reached and Even being able to maintain it is theoretically classified as harmful. Sustainable economic growth rate in the short-medium term.

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Central banks are aware of the impact of their restrictive decisions; However, at present, inflation control dominates other indicators. By the end of 2023, the GDP of the global economy is expected to reach $105 trillion, an increase of $5 trillion from the previous year.

In nominal terms, this is an increase of 5.3% in global GDP. In inflation-adjusted terms, growth of 3% would be achieved.

2023 began with turmoil in the global economy, with the collapse of several medium-sized US banks, as well as persistent inflation and tight monetary conditions in most countries that shook financial markets. However, some economies have proven resilient.

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perspective 2024

According to the Funds Society’s report on the outlook to 2024, the current weak economic environment is expected to persist for the next three to four quarters. The forecast is based on leading indicators called PMIs, which are showing negative trends in both the manufacturing and services sectors.

That is, pending further developments through 2024, the global economic outlook is showing signs of cooling and weakness. However, monitoring factors to take into account in 2024 and which could change these forecasts will be: price developments, the impact of energy, oil and food prices on inflation, a possible second wave on inflation through margins and/or wages. the impact of, the development of global economic activity and, in particular, in China, Germany, the United Kingdom and emerging countries, the transmission and impact of monetary policy tightening, potential geopolitical tensions, the pace of Next Generation Fund execution and public Development of accounts.

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As a result, in a complex environment marked by uncertainty, the outlook for 2024 appears to be similar or slightly weaker than that of 2023. Although the possibility of recession has been ruled out, the concept of economic cooling remains relevant, suggesting that there is still a recession. long way to go.

In most economies, the priority remains to achieve sustained deflation while ensuring financial stability. Therefore, central banks should keep their focus on restoring price stability and strengthening financial supervision and risk monitoring.

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