A recent survey suggests that the global economy is primed to maintain its robust momentum throughout the remainder of 2024 and into 2025, contrary to earlier predictions of a slowdown.
This shift in growth outlook brings new challenges for central banks worldwide, as they navigate the implications of prolonged economic expansion.
Among the major contributors to this anticipated pickup in growth are the United States and India, with economists foreseeing substantial contributions from both economies.
The survey, conducted from March 27 to April 25 and covering 48 economies with responses from 500 economists.
Projections indicate that global growth is expected to reach 2.9% this year, surpassing earlier forecasts of 2.6% made in January.
Economists also anticipate a growth rate of 3.0% in 2025. Over 90% of contributors have revised their views upwards, suggesting a significant likelihood of even stronger growth than currently predicted.
Nathan Sheets, Global Chief Economist at Citi, stated, "So far we've been marking up growth for the global economy in a number of places including major economies like the U.S. and China, Europe to some extent as well. So it's feeling solid."
However, the prospect of sustained growth poses challenges for central banks, particularly regarding inflation and interest rates.
The majority of central banks surveyed are expected to grapple with above-target inflation by the end of the year, signaling a need for prolonged monetary tightening measures.
The European Central Bank (ECB), for instance, is forecasted to implement rate cuts in June, followed by additional reductions in the second half of the year to stimulate growth within the Eurozone.
The Bank of England, which initiated rate hikes in December 2021, is projected to lower rates in the next quarter, reflecting the cautious approach adopted by major central banks in response to evolving economic dynamics.
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