The global economic recovery is progressing at a steady but gradual pace, with growth rates varying across different regions. According to the latest forecast, the world economy is expected to grow at a rate of 3.2% in 2024 and 2025, similar to the growth seen in 2023. Advanced economies are projected to experience a slight increase in growth from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025, while emerging market and developing economies are likely to see a modest slowdown from 4.3% in 2023 to 4.2% in both years.
Inflation is anticipated to decrease gradually over the next few years, with global inflation projected at just over three percent by the end of the decade. Core inflation is expected to decline at a slower rate compared to overall inflation rates, and advanced economies are expected to reach their inflation targets sooner than emerging market and developing economies.
Despite significant central bank interest rate hikes aimed at restoring price stability, the global economy has shown resilience due in part to changes in mortgage and housing markets during the low-interest-rate decade before the pandemic that helped moderate immediate impacts of policy rate hikes. Medium-term prospects suggest lower growth in output per person due to persistent structural frictions hindering capital and labor mobility between firms. Additionally, China’s economic outlook will have an impact on trading partners around the world as they adjust their policies accordingly.
Overall, while there are some bright spots for certain sectors of the global economy, long-term challenges remain that could limit sustained growth and prosperity for many countries around the world.