The global economy is grappling with the impact of heightened interest rates and lower external demand, impeding economic momentum and fostering a subdued business sentiment worldwide.
The challenges are further compounded by China's economic deceleration and declining trade, particularly affecting the global manufacturing sector.
Additionally, increased global tensions from events like Israel’s conflict with Hamas and the situation in Ukraine pose significant risks to ongoing economic growth. In light of these factors, GlobalData in its Q1 2024 update, projects a continuation of the global economic slowdown for the third consecutive year, with an anticipated growth rate of 2.1% in 2024, compared to an estimated 2.4% growth recorded in 2023.
The report underscores the intricate interplay of economic factors and geopolitical events shaping the trajectory of the world economy, necessitating strategic considerations for businesses and policymakers alike.
In this evolving economic environment, Asia-Pacific (APAC) is poised to lead in 2024 with the highest growth rate. However, the growth projection for APAC indicates a slowdown over last year due to the economic turmoil in China.
In the Middle East and Africa (MEA) region, the outlook remains uncertain due to the ongoing geopolitical tensions and oil production cuts. GlobalData projects the growth in the MEA region to accelerate in 2024, based on the expected improvement in external demand and growth in the non-oil sector.
GlobalData anticipates a deceleration in growth for the Americas region, slowing to 1.1% in 2024 from the previous year's 2.2%. This moderation is attributed to factors such as the slowdown driven by diminishing pandemic savings, a surge in household debt, and a potential deceleration in 'buy now, pay later' plans. Additionally, the projection foresees a slowdown in business investment growth due to elevated financing costs stemming from higher interest rates.
The European region is projected to slightly recover in 2024 as the energy supply concerns and cost of living crisis ease. The surge in global debt presents substantial challenges for governments navigating major crises. The rise in debt servicing costs could hinder initiatives addressing climate change and aging populations, heightening concerns about potential fiscal crises and economic instability in the future.
Ongoing geopolitical tensions, particularly in the Red Sea since November 2023, are significantly impacting the global supply chain. Incidents such as piracy, missile strikes, and UAV attacks on vessels are posing a threat to crucial shipping routes. Numerous major shipping companies and vessels, registered under various flags, have encountered disruptions and damages, underscoring the vulnerability of supply chain in key maritime regions.
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