(CLO) Goldman Sachs Research predicts that the global economy will perform better than expected in 2024 thanks to inflation cooling down, a vibrant job market, and many fields growing positively.
👉 Global growth is estimated at 2,6%
Investment bank Goldman Sachs forecasts the world economy will grow at an average of 2,6% in 2024, higher than the 2,1% consensus forecast of economists polled by Bloomberg. Notably, the US economy is forecast to outpace other developed economies with an estimated growth rate of 2,1%.
Also according to Goldman Sachs, policymakers in developed countries are unlikely to cut interest rates before the first half of 2024 unless economic growth is lower than forecast. The bank says that inflation will continue to cool across advanced economies and emerging markets, and is expected to decline further.
👉 Global manufacturing operations
Goldman Sachs also forecasts that global factory operation will recover from the recent downturn, as "headwinds" are set to dissipate this year.
A team of Goldman Sachs experts led by chief economist Jan Hatzius had assessed that manufacturing activity will partly recover in 2024 compared to the slowing pace in 2023, especially when “the spending model Targets normalized, European gas-intensive production fell into a depression and the inventory-to-GDP ratio stabilized.”
👉 Major economies avoided recession
Rising real earnings also contribute to Goldman Sachs's positive growth outlook.
Although Goldman Sachs maintains its view that US real earnings growth will decelerate from a strong 4% pace in 2023, real earnings growth is still expected to support consumption and growth of GDP by at least 2%.
While rising interest rates and fiscal policy will continue to affect the growth of the G10 economies, Mr. Hatzius believes that the worst of the "drag" has passed.
