Goldman Sachs, a leading multinational investment bank, anticipates that the global economy will surpass expectations in 2024, mirroring the impressive performance witnessed in 2023. In their ‘Macro Outlook 2024: The Hard Part is Over’ report released on Friday, the firm projects a robust worldwide GDP expansion of 2.6 percent on average annually for the year.
This forecast stands in contrast to the 2.1 percent consensus prediction among economists surveyed by Bloomberg, indicating a more optimistic outlook. Goldman Sachs highlighted the surpassing of their own optimistic expectations for global economic performance in 2023.
The report indicated that the current trajectory of GDP growth is poised to exceed last year’s consensus forecasts by 1 percentage point globally and by 2 percentage points in the US. It also mentioned a significant decrease in core inflation from 6% in 2022 to 3% in economies affected by a post-COVID price surge.
Anticipating further disinflation in the coming year, the report suggested that while the normalization of product and labor markets has progressed significantly, its complete disinflationary effect is ongoing. It forecasted a drop in core inflation to 2-2.5% by the end of 2024.
Goldman Sachs Research’s predictions for 2024 GDP growth are notably more optimistic than the consensus for eight out of nine of the world’s largest economies as of November 8, 2023. Particularly, their economists anticipate that the US growth will surpass that of other developed market peers.
Additionally, the investment bank mentioned a limited recession risk, affirming a 15 percent probability of a US recession. They highlighted various factors contributing to global growth, such as strong real household income growth, a lesser impact from monetary and fiscal tightening, resurgence in manufacturing activity, and a readiness of central banks to implement insurance cuts if growth slows.
The report concluded that while major developed market central banks might have completed their rate hikes, rate cuts may not occur until the latter half of 2024, with policy rates expected to remain above estimated long-run sustainable levels.
