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Goldman Sachs’ recent analysis of the global economy for the upcoming year predicts a sustained trend of disinflation and provides optimistic projections for global growth. Despite a challenging year in 2023, the American bank foresees positive trends in 2024.
Goldman Sachs anticipates that global growth will exceed estimates by several percentage points. The bank projects an average annual growth in global GDP of 2.6% for 2024, in contrast to the 2.1% forecast by economists surveyed by Bloomberg. Goldman Sachs expresses particular optimism for the American economy, expecting it to outperform its counterparts in developed markets.
Disinflation at the heart of forecasts
Goldman Sachs emphasizes that disinflation will be a significant focal point for the upcoming year. The bank predicts that core inflation, currently at 3%, will rise to an average range of 2 to 2.5% across the G10, excluding Japan. This projection aligns with the inflation targets set by most developed market central banks by the end of 2024.
The bank points out several factors that could contribute to global growth in 2024. These include a notable increase in real household income, a reduced impact of monetary and fiscal tightening, a resurgence in manufacturing activity, and an increased willingness of central authorities to implement support measures in the event of an economic slowdown.
Interest Rate Forecasts and China
Goldman Sachs suggests that interest rate cuts in developed markets are unlikely before the second half of 2024, unless economic growth turns out to be significantly weaker than expected. The bank goes further to predict that central banks will maintain interest rates above their current levels and long-term estimates.
Regarding China, despite additional political stimulation aimed at supporting short-term growth, Goldman Sachs forecasts a slowdown to 4.8% in 2024. This deceleration is seen as a consequence of the diminishing impact of the post-Covid reopening.
If Goldman Sachs’ forecasts materialize, 2024 could represent a period of robust economic growth and moderating inflation in many key economies. However, it’s important to note that these optimistic projections are subject to risks and unforeseen factors that could influence global economic developments.
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