2024-07-30 13:43:30
Optimism about the outlook for global growth this year and next is rising among economists polled by Reuters, although risks of higher inflation remain. However, they continue to bet on further interest rate cuts.
While most major central banks managed to contain skyrocketing inflation last year with rapid interest rate hikes, a resilient global economy with strong employment and wage growth continues to keep risks of renewed price pressures alive.
A total of 56 percent of economists polled – 114 of 202 who answered a question about inflation in the global survey covering about 50 leading economies and conducted from July 8 to 25 – said it was more likely to be higher , than they forecast for the rest of the year. The same applies to interest.
The global economy is expected to grow by 3.1 percent this year and next, up from April’s 2.9 percent and 3 percent and roughly in line with the International Monetary Fund’s (IMF) latest forecasts.
That optimism contrasts with concerns earlier in the year about whether the U.S. economy will be able to weather such an aggressive monetary tightening cycle without registering a downturn, but anxiety about what’s happening in the world’s second-largest economy remains.
Growth levels for 24 of the 48 leading economies in the survey were revised up from the forecast three months ago. Forecasts for 18 economies have been revised downwards, while six have remained unchanged, BTA reported.
When asked which component of core inflation will have the hardest time responding to changes in demand over the remainder of 2024, the majority of respondents – 56 of the 104 who responded to the question – said it would be services, followed by 30, bet on finding shelter and rents. The remaining 18 cited other components.
The majority of respondents – 60 percent, or 131 out of 220 people – said it was more likely that interest rates would be higher by the end of the year than current forecasts for a decline.