According to the World Economic Forum (WEF), there has been a significant increase in the number of chief economists expecting strong growth in the US this year. This stands at 97%, up from 59% in January 2024, indicating that despite high interest rates, the world’s largest economy is not slowing down. The global markets are eagerly anticipating potential interest rate cuts from the US Federal Reserve as inflation shows signs of easing. Nearly seven out of ten economists polled by Reuters anticipate a rate cut by the American Central Bank in September this year.
However, if economic growth in the US remains robust and new jobs continue to be added, it could impact the likelihood of a reduction in inflation. This could delay the anticipated rate cut cycle that the markets are waiting for. The addition of 175,000 jobs in April, though slightly below JPMorgan’s estimates, indicates strong growth in the US economy. Any delay in US interest rate cuts will have a ripple effect on emerging economies like India.
The survey conducted by the WEF revealed that nearly 70% of economists predicted weak growth for Europe and China in the remainder of 2024. The risks posed by international conflicts are still a significant concern, with 97% of economists viewing geopolitics as a source of volatility. Additionally, more than eight out of ten economists believe that domestic tensions will further contribute to market volatility this year due to the upcoming elections in at least 64 countries, including India, the US, and the UK. Despite this positive outlook for some regions, there is still uncertainty about China’s growth prospects due to concerns about its rising debt levels and slowing economic growth.
In contrast to Europe and China’s lackluster performance, India is expected to see steady growth due to its young population and favorable business environment. However, India also faces challenges such as high inflation rates and political instability ahead of upcoming elections.
Overall, while some regions may face challenges ahead, others continue to show positive signs of economic growth and stability. It remains to be seen how these developments will play out over time and what impact they will have on global markets and geopolitical tensions.
