IN FOCUS6-8 min read

Schroders Economics Lens Q4 2023

A de-synchronisation in global growth: your chart-pack guide to the global macroeconomic outlook.

12-08-2023
Economics lens

Authors

Keith Wade
Chief Economist & Strategist
Azad Zangana
Senior European Economist and Strategist
David Rees
Senior Emerging Markets Economist
George Brown
Senior US Economist

Schroders Economics Lens is a chart-pack guide to the global macroeconomic outlook.

It is published quarterly and illustrates the latest economic forecasts and views from Schroders economics team. The Lens includes analysis of the outlook for growth, inflation, and interest rates, as well as topical issues. This quarter we show how growth has become less synchronised post-Covid, and how this is set to persist into 2024.

Click here to download your Q4 copy. Schroders Q4 Economic Lens

The global economy has been less synchronised post-Covid

EN

Source: LSEG Datastream, Schroders Economics Group, 30 November 2023.

Summary:

  • New baseline forecast – 2025 projections added. After an estimated expansion of 2.7% this year, global GDP growth is expected to slow to 2.2% in 2024 and 2025.
  • Global growth set to be sluggish over the next two years as inflation continues to ease. However, headline forecasts mask less synchronised global activity. Diverging fortunes of major economies have implications for policymaking and financial markets.
  • The large structural changes that form the basis of the “3D Reset” (deglobalisation, demographics and decarbonisation) mean that these divergences will persist in the long run. Read more: The 3D Reset
  • In the near term, an outright US recession remains unlikely, but the growth outlook in other parts of the world is not rosy. Europe’s economy is flirting with recession, and the UK economy looks set to fall into recession in the first half of 2024. The trend slowdown in GDP growth in China is forecast to continue, albeit there will be economic cycles around this.
  • Monetary policy in advanced economies is probably at peak restrictiveness, but the divergence in economic fortunes is likely to determine whether interest rates really will remain “higher for longer”.
  • Despite early signs of softening, we have pushed back our expectations for US monetary policy and now think the Federal Reserve (Fed) will not start easing until the second half of 2024 as policymakers fret about a second wave of inflation.
  • The case for keeping interest rates elevated in Europe is not obvious and the European Central Bank (ECB) could deliver a first rate cut early in 2024. Deteriorating fundamentals also suggest that the Bank of England (BoE) may not be far behind.

Click here to download your Q4 copy.

The latest Economic and Strategy Viewpoint, which includes a more detailed discussion of our latest economic views, forecasts, and scenario analysis, is available in full here.

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The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.

Authors

Keith Wade
Chief Economist & Strategist
Azad Zangana
Senior European Economist and Strategist
David Rees
Senior Emerging Markets Economist
George Brown
Senior US Economist

Topics

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