Our global growth forecast for 2024 remains at 2.3%, though there are potential downside risks including escalation of conflicts in Eastern Europe and the Middle East, related disruptions to energy supply and prices, sticky core inflation rates, and tighter-for-longer financial conditions.
Recent growth divergence in the US and Western Europe will not last. Fourth-quarter data has not been published at time of writing, so we continue to forecast “technical” recessions across many parts of Western Europe during the second half of 2023, including the eurozone and UK, in tandem with weakness in initial third-quarter GDP prints. The Bank of England’s latest analysis of downbeat UK economic prospects has emphasized that the full effects of tighter financial conditions are yet to be felt.
Growth prospects in North America are set to weaken markedly in 2024. In addition, the mix of growth, with final sales weaker and inventory investment stronger than expected, led to a markdown of expected fourth-quarter growth to 1.1% – well below the market’s potential. More of the same is expected during 2024 as tighter financial conditions work through the economy. Our forecasts for Canadian growth have also been revised markedly downward particularly for 2024, which is largely due to weakness in household consumption, reflecting the impact of high borrowing costs and tight credit conditions.