Global growth is supported by moderating inflation, more accommodative financial conditions, and a pickup in international trade.

In Q2 2024, the US had the highest GDP growth among G7 economies over this period at 9.4%. Still, growth rates are not forecast to reach the heights of prior expansions owing to a combination of headwinds including elevated debt burdens, higher interest rates, and various geopolitical uncertainties. The forecast includes a continuation of the gradual slowdown in the US economy, reflecting factors including tighter bank lending standards, less supportive fiscal policy, and the strong dollar. In contrast, Western Europe’s economic conditions have been improving, although growth is expected to remain rather tepid. For the Euro area, we expect a gradual recovery in GDP in 2024, with growth rising to 0.4% q-o-q by end-2025. We see euro area core inflation above target through 2024-2025, but services inflation momentum gradually slowing. The ECB cut rates by 25bp in June 2024. We forecast another 125 bp of cuts at a quarterly pace until September 2025. We expect Asia’s export growth to gradually ease, due to softening global demand, fading price effects, and the end of frontloading.