Global Economic Outlook (2024)

Global Overview

December 2023

Marginal upgrades for 2023 and 2024 in last forecast update of the year

Global real GDP is projected to grow by 3.2% in 2023, a small 0.1% upgrade from our November forecasts. Most major economies have published GDP data for the third quarter, and the book will not close on 2023 until February when Q4 numbers are released. Nonetheless, growth for 2023 has tracked much stronger than expected. Compared to the projections from a year ago, our global growth forecast has increased by a full percentage point. The main source for the upside surprise was US outperformance, but emerging market economies, especially India, also showed greater-than-expected momentum.

Our global real GDP growth forecast for 2024 also ticked up by 0.1% to 2.6%. Global Purchasing Managers Indices showed global industrial activity descended into a mild contraction in the last year-and-a-half, while more volatile global services activity stalled again in October and November. This weakness is likely to extend into the early part of 2024 as the restraining effects of aggressive monetary policy tightening to tackle inflation globally come into full view. We continue to forecast a short and shallow recession in the US in the first half of 2024 and stagnant growth in Europe. China should also experience significantly slower growth next year, placing additional drag on global growth.

Expanding near-term forecast outlook to 2025

While economic conditions at the start of 2024 may present a challenging environment for businesses to operate, global growth should improve in the second half of the year. Barring any unexpected inflation surprises, central bank policy rates appear to have peaked in all major economies and the focus is shifting to the coming easing cycle. The question is not whether we will see rate cuts next year but how many. Several emerging and developing economies, including Brazil and Vietnam, have started reducing the degree of restrictive monetary policy. More economies will likely join suit, allowing global real GDP growth to reaccelerate to 2.8% in 2025.

Developing economies mainly responsible for 2023 growth surprise, mature economies main responsible for 2024 growth dip

The upside growth surprises in 2023 stemmed mainly from emerging and developing economies. Growth accelerated to what we expect will be a rate of 4.5% in 2023, up from 3.9% in 2022. Emerging and developing economies will lose some of that momentum next year, but we still project 3.8% real GDP growth for both 2024 and 2025, well above our longer-term model forecast. Yet, it is mature/advanced economies other the US that experienced the most difficult 2023. Real GDP growth among that group of economies slowed from a very robust 3.1% in 2022 to a projected 0.9% in 2023, and our 1% forecast for 2024 suggests only limited improvement in 2024.

Key risks to the global economic outlook remain skewed to the downside

The main risk is still greater-than-expected inflation persistence. Central banks are showing growing confidence that inflation is heading in the right direction, but their inflation targets have yet to be achieved. Pockets of domestic demand resiliency and upward pressure on wages, due to labor shortages, will remain key challenges for central banks in their quest to restore inflation to targets in 2024. That could mean fewer interest rate cuts in total globally and tighter-for-longer monetary policy.

Finally, geopolitical risks remain elevated. The risk of higher commodity prices as a result of the conflict in the Middle East may have diminished somewhat. Yet, the most recent disruptions to the key Red Sea shipping route, which leads to the Suez Canal accounting for 12% of global trade, highlights how quickly geopolitics can impact the global economic outlook. Tensions between the US and China over Taiwan could similarly affect even more important global supply routes through the South China Sea. And we must not forget Russia’s war against Ukraine, which could intensify again and further weigh on the already bearish European growth outlook.

Our 10-year economic outlook continues to point to a prolonged period of declining vitality in the global economy. Real GDP growth will return to its slowing trajectory with mature markets making smaller contributions to global GDP over the next decade. Nonetheless, there are still opportunities for firms to invest in both mature markets—given their wealth and need for innovation to compensate for shrinking labor forces—and emerging markets—given their need for both physical and digital infrastructure to support their sizable and young labor forces. Keys to ensuring growth over the longer term include developing new lines of business, strengthening corporate culture, embracing digital transformation and automation; recruiting for talent with new skills not currently represented in the company, and maximizing the hybrid work model where it makes sense.

Note: Since October 2022 The Conference Board usesofficial Chinese GDP data in our global aggregation which led to an upward revision of the global aggregate growth rate. The alternative figures for China that we used before were lower, and hence our global aggregate was also lower. The change from using official GDP data as our main series for China is made for several reasons including: lack of up-to-date data that constrain the tracking of our alternative GDP measure on a timelier basis; lack of detailed data to perform the necessary calculations as described in the original methodology; and biases in official GDP data appearing smaller in earlier years. We continue to track alternative GDP data for China but will do so on a less frequent basis.

For questions or comments, please email ted@conference-board.org.

More Insights For What's Ahead In The Global Economy

• Data: Forecasts and long-term projections available through Data Central.
• Global Recession Hub:Navigating the Economic Storm (continuously updated).
• Global: Quarterly publication on the global economy: StraightTalk®;Annual long-term outlook (October 2023).
• United States: Monthly forecast; Monthly Economy Watch webcasts and report; Annual long-term outlook (October 2023).
• Europe:Monthly forecast; Monthly Economy Watch report; Annual long-term outlook(October 2023).
• China: Monthly Economy Watch report; Annual long-term outlook (October 2023).
• Asia: Annual long-term outlook (October 2023).
• Middle East and North Africa (MENA): Quarterly Outlook(October 2023);Annual long-term outlook(October 2023).
• Emerging Markets: Monthly Economy Watch report;Annual long-term outlook(October 2023).

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