Global economy ‘stronger than expected’ in 2024, says Citi By Investing.com

Investing.com– Citi analysts said they expect the global economy to perform better in 2024 than initially expected amid interest rate cuts and strong momentum in some emerging markets.

Growth in developed economies such as the US, UK and Canada is expected to be “considerably weaker” than seen in the first half of the year, while China is also expected to lag amid slow stimulus from the government.

But lower interest rates in developed economies are expected to spur broader easing cycles in emerging markets, helping to facilitate growth.

The global economy is expected to grow by about 2.5 percent in 2024, slightly below the previous year’s growth, Citi said.

The brokerage expects aggregate growth in developed markets to “disappear” in 2024 due to weakness in Germany and broader stagnation in the euro zone.

The outlook for the U.S. also remains uncertain, although resilience in consumer spending and a deeper Fed easing cycle are expected to add some strength to growth, Citi said.

But a shrinking labor market remains a key source of uncertainty, especially as recent indicators have pointed to a steady deterioration in the sector.

In Japan, Citi said it expects a slight decline in gross domestic product for 2024, although consumer spending is expected to rise, which also leads to higher inflation.

The Bank of Japan is also expected to raise interest rates further through December, with Citi saying the central bank has “room to choose when it raises rates.”

China a weak point amid weak consumer sentiment

Citi said China remained a major point of concern about slowing growth, especially as spending and consumer sentiment continued to disappoint.

The brokerage noted that activity in both the manufacturing and services sectors had lost steam in recent months, while a prolonged decline in the real estate sector showed little sign of abating.

“What is striking is that the authorities have been slow to provide political support. “The recent work we’ve done casts doubt on whether fiscal policy has even been stimulative this year,” Citi analysts said.

The brokerage expects Chinese GDP to grow 4.7 percent this year, below the government’s annual target of 5 percent.