The year 2024 is expected to be a challenging one for the global economy as it faces the aftermath of the COVID-19 pandemic, the invasion of Ukraine by Russia and the growing threat of climate change. In this article, we will examine some of the key trends and projections for the global economy in 2024, based on various sources and reports.
GDP IN 2024
According to the World Bank, global gross domestic product (GDP) is expected to grow by 2.4% in 2024, down from an estimated 2.7% in 20231. This slowdown reflects the impact on economic activity of higher interest rates, tighter financial conditions and subdued external demand. The growth gap between advanced and developing economies is expected to widen, with the former slowing to 1.1% and the latter remaining stable at 4.0%1.
Among the major economies, GDP growth in the United States is expected to decline from 2.5% in 2023 to 1.4% in 2024, due to falling household savings, high interest rates and a softening labour market2. China is expected to experience a moderate slowdown amid domestic and external headwinds, with growth estimated at 4.7% in 2024, down from 5.3% in 20231. Europe and Japan also face significant economic headwinds, with growth rates of 1.2% forecast for both regions in 2024.
The Global Economy
The global economy is undergoing a major transformation as emerging markets and developing economies (EMDEs) become more prominent and influential on the world stage. According to a recent report by Goldman Sachs, the balance of global economic power will shift dramatically in the coming decades, with Asia becoming the largest regional contributor to global GDP, overtaking the traditional economic powerhouses grouped under the Developed Markets (DM) category3 .
By 2030, Asia (excluding the DMs) will account for 40% of world GDP, slightly ahead of the DMs' expected share of 36%. This would be a massive shift from 50 years ago (2000) when the DMs accounted for over 77% of world GDP3. Within Asia, China and India will account for most of the region's GDP in 2030, although growth in China will have slowed significantly. India, on the other hand, will be the fastest growing major economy in the world, with an average annual growth rate of 6.5% between 2020 and 2030.
2024 Economic Outlook
The economic outlook for 2024 is characterised by a further slowdown in global growth, which is expected to be 2.7%4. Higher interest rates for longer and dwindling savings will slow consumer spending and reduce business investment. This will weaken labour markets and the services sector, the key pillars of previously resilient growth, on top of a persistently weak global manufacturing and trade backdrop.
The growth gap between advanced and developing economies is expected to widen, with the former slowing to 1.1% and the latter remaining stable at 4.0%4. Major economies, including the US, the euro area and China, will each face different challenges that will keep growth subdued. On the positive side, the Asia-Pacific region will remain the main source of global growth, with accelerating momentum in many economies, including India, Vietnam and Indonesia.
Another positive factor is that global inflation is expected to ease noticeably in 2024 as economic activity slows. However, the global economy continues to face unusually high levels of uncertainty, as well as risks and opportunities from several transformative developments, such as rising geopolitical tensions and conflicts, the reset of globalisation, and technological advances, particularly in artificial intelligence.
World Bank Global Economic Prospects
According to the World Bank, the global economy is projected to grow by 2.4% in 2024, down from an estimated 2.7% in 2023. This slowdown reflects the impact on economic activity of higher interest rates, tighter financial conditions and subdued external demand. The growth gap between advanced and developing economies is expected to widen, with the former slowing to 1.1% and the latter remaining stable at 4.0%.
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Among the major economies, GDP growth in the United States is expected to decline from 2.5% in 2023 to 1.4% in 2024, due to falling household savings, high interest rates and a softening labour market2. China is expected to experience a moderate slowdown amid domestic and external headwinds, with growth estimated at 4.7% in 2024, down from 5.3% in 20231. Europe and Japan also face significant economic headwinds, with growth rates of 1.2% forecast for both regions in 2024.
The recovery in emerging markets and developing countries is forecast to slow to 4.7% in 2024. Even so, the gains in this group of economies are not enough to recover the losses experienced during the 2020 recession, and output in 2024 is expected to be 4.1% below pre-pandemic projections. Per capita income in many emerging market and developing economies is also expected to remain below pre-pandemic levels, and losses are expected to exacerbate deprivations in health, education and living standards.
World Economy Outlook
According to the IMF, the global economy will slow to 2.1% in 2023 and to 2.7% in 2024. As inflation continues to decline and real incomes strengthen, the global economy is projected to grow by 3% in 2025. Global economy remains primarily reliant on the rapidly expanding Asian economies.
Tight global financial conditions and subdued external demand will weigh on growth in emerging market and developing economies. Risks include increased banking stress and stricter monetary policy. Global cooperation is needed to support financial regulatory reform, climate change mitigation and debt relief.
Among the major economies, growth in the US is expected to reach 6.8% this year, reflecting large fiscal support and the easing of pandemic restrictions. Growth in other advanced economies is also strengthening, but to a lesser extent. Among emerging and developing economies, China is expected to rebound to 8.5% this year, reflecting the release of pent-up demand.
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The year 2024 will be a critical one for the global economy as it faces many challenges and uncertainties. Recovery from the COVID-19 pandemic will be uneven and fragile, with growth slowing in most regions. The geopolitical landscape will also be volatile and complex, with rising tensions and conflicts between major powers. The climate crisis will pose an existential threat to humanity, requiring urgent and coordinated action. The technological revolution will bring both opportunities and risks, as artificial intelligence and other innovations reshape the world.
The global economy will also undergo significant change as emerging and developing economies become more influential and dominant on the world stage. Asia will be the main driver of global growth, with China and India leading the way. Other regions, such as Africa and Latin America, will also have the potential to grow and prosper with the right policies and institutions. The balance of global economic power will shift dramatically in the coming decades, with implications for global order and governance.
The future of the global economy is uncertain and complex, but also full of possibilities and opportunities. The decisions and actions of governments, businesses and individuals will shape the outcome and direction of the global economy. The need for global cooperation and coordination is more important than ever as the world faces common challenges and common goals. The global economy in 2024 and beyond will depend on the vision and will of the global community.