BENGALURU, April 26 — The global economy is likely to carry its solid momentum for the rest of the year and into 2025, defying earlier expectations of a slowdown, according to a Reuters poll of economists who said stronger growth than forecast was more likely than weakness.
That shift in the growth outlook brings its own set of challenges for central banks, which raised rates in quick succession to try and drive inflation down to target but now may have to wait even longer before considering rate reductions.
Among bigger economies, the United States and India were expected to contribute the most to the pickup in growth. There was no deterioration in the consensus view for the euro zone or number 2-economy China either, according to a March 27 to April 25 Reuters poll of 500 economists covering 48 economies.
Global growth was forecast at 2.9 per cent this year, faster than 2.6 per cent in a January poll, followed by 3.0 per cent in 2025. More than 90 per cent of common contributors upgraded their views and still said there was a significant chance growth could be even stronger.
A 60 per cent majority of economists, 98 of 162, said the global economy this year was more likely to grow faster than they expected than undercut their predictions.
“We are continuing to be surprised by the resilience of the global economy. Now, part of that is we entered the year with subdued expectations, we thought that there would be a deceleration this year,” said Nathan Sheets, global chief economist at Citi.
“So far we’ve been marking up growth for the global economy in a number of places including major economies like the US and China, Europe to some extent as well. So it’s feeling solid.”
On the flip-side, strong growth was expected to keep inflation and interest rates higher for longer.
More than three-quarters of the central banks covered, 16 of 21, were expected to still be dealing with above-target inflation by year-end, up from 10 in the January quarterly poll.
Economists still expect major central banks to cut rates either this quarter or next, broadly in line with financial market pricing. But most now forecast fewer cuts by year-end as inflation remains sticky.
— Reuters
