Slower economic growth predicted this year

In its Global Economic Prospects report, the World Bank estimated that global economic growth would slow for a third consecutive year in 2024. Several global economic organizations have projected the global economy to grow relatively slowly this year as it faces several challenges. Despite a strong likelihood of slower growth ahead, the World Bank believes global recessionary risks have subsided compared to last year.

• The World Bank estimates the global economy will expand by 2.4% this year. This would be down from the 2.6% expected pace of growth in 2023 (all data has yet to be confirmed and reported). After a strong 2021, where the global economy recovered after the COVID-19 pandemic, economic growth is expected to slow for a third straight year in 2024.
• Growth might be relatively soft in advanced economies, where the World Bank is projecting growth of just 1.2% in 2024, compared to 1.5% last year. The economic organization expects developing economies to see growth of 3.9% this year, down from 5.5% in 2023.
• Geopolitical tensions, tight financial conditions, reduced trade activity and high debt, particularly in developing economies, are all likely to weigh on global economic growth this year, according to the World Bank. On the plus side, the World Bank expects global inflation to moderate in 2024, which might provide some much-needed relief to households and businesses.
• Canada’s economy might not be immune from the global economy’s struggles this year. Canada’s gross domestic product shrank by 1.1%, annualized, in the third quarter of 2023. Given slower economic growth and falling inflation, the Bank of Canada is widely expected to start reducing interest rates this year.

 The headwinds faced by global economies might slow growth this year, which could result in some volatility in financial markets. 

CICB Daily Market Brief