- The global outlook is further projected to improve between 2025-28 with an expected annual growth average of 2.7 per cent.
- EIU further says the monetary tightening is over, but there will be caution on loosening.
Research body Economist Intelligence Unit projects the global GDP growth at 2.4 per cent this year from last year’s 2.3 per cent.
Emerging markets such as Kenya that are poised to record positive growths during the year will propel the prospect.
Recent projection by global financial services firm Allianz Trade projected Kenya’s GDP growth at slightly above five per cent in 2024 on the back of strong growth witnessed last year driven by agriculture, tourism and services.
“The global projected growth will also largely be driven by the evolving Artificial Intelligence and green industries,” EIU says in its latest economic outlook report.
It adds that emerging economies will power the global GDP growth over the next five years.
However, the unit says the growth prospects for this year is not strong, as the relatively high interest rates will constraint economic activities.
“Surprisingly after high risks of recession last year, the phenomenon will be avoided this year, as there are no indications of systemic debt strains that could pull the world economies into recession.”
The global outlook is further projected to improve between 2025-28 with an expected annual growth average of 2.7 per cent, aided by monetary easing and investment in technology and the energy transition.
This however still falls short of recent standards, as global growth averaged 3 per cent a year in the 2010s, according to the unit.
“Monetary tightening is over, but there will be caution on loosening. Our forecasts assume that the Federal Reserve (Fed, the US central bank) and the European Central Bank (ECB) have concluded their policy rate increases,” the unit says.
“A desire to fully anchor inflation expectations means that both institutions are likely to move later than markets expect in terms of lowering rates; we forecast that easing will begin in June, and that it will then proceed fairly gradually.”
The unit therefore expects that some emerging markets will continue to lower rates ahead of the Fed to support growth, as the exchange-rate outlook stabilises.
On the other hand, disinflation is forecast to continue, but upside risks persist.
The post-pandemic normalisation of supply, alongside softer demand growth is expected to drive consumer price inflation lower in most markets.
However, the rapid price gains of recent years will not be undone. In addition, upside risks continue to weigh on our inflation outlook, the unit adds in part.
Nevertheless, matters trade, the report highlights that although remaining far below the levels they reached during the pandemic, global shipping costs have risen as a result of the disruption of trade in the Red Sea.
“Should the Israel-Hamas war begin to disrupt oil supply, the impact on hydrocarbon prices would also be significant. Stronger than expected effects from unpredictable climate conditions on agriculture output would push up food prices, especially in developing economies.”