Qatar National Bank (QNB) expects the growth of the global economy to remain stable against the backdrop of steady growth in both advanced and developing economies, easing monetary policy in advanced economies, and the absence of radical shifts in international trade volumes.
Qatar National Bank (QNB) said in its weekly report: The significant headwinds led to bleak expectations regarding global economic growth at the beginning of the year 2024, but the global economy has once again proven its ability to withstand these negative factors.
He pointed out that although this year’s expected growth of 3.2 percent is lower than the average of 3.6 percent over the period 2000-2023, it is still comfortably above the 2.5 percent threshold below which the global economy is in recession. Moreover, Growth forecasts for next year are also 3.2 percent, indicating continued stability.
The bank believed that the World Economic Outlook report is a useful tool for discussing global economic prospects, as it is the main publication issued by the International Monetary Fund twice a year, and it is a reference standard for the sector and markets.
He explained in a related context that the report provides a coordinated and unified analysis of global economic conditions, trends and risks, and is therefore a useful complement to consensus forecasts, which represent a summary of diverse viewpoints.
He considered that the recent release of the World Economic Outlook report provides an appropriate opportunity to reconsider and re-evaluate global expectations.
The Qatar National Bank (QNB) report highlighted the main factors that confirm the stability of growth expectations for the global economy, the first of which is that stable global economic growth is considered supported by steady growth in the major groups of economies.
The report indicated that despite the International Monetary Fund’s expectations that economic growth in the United States would slow from 2.8 percent to 2.2 percent, this decline will be compensated by improved performance in the euro zone, the United Kingdom, Japan, and other developed countries.
He considered that, as a result, the group of advanced economies, which represents 40 percent of the global economy, would grow steadily by 1.8 percent annually in the period 2024-2025 despite the varying trends within the group.
Growth in developing economies is also expected to remain stable, at a much higher level of 4.2 percent annually in both 2024 and 2025.
In this case, the report believed that the modest slowdown in emerging and developing Asia and in emerging and developing Europe will be offset by improved performance in Latin America, the Middle East, Central Asia, and Sub-Saharan Africa. Thus, stable global economic growth is the result of steady growth in both groups of developed and developing economies.
The second factor mentioned in the report is the role that monetary policy easing cycles by the major central banks will play in containing headwinds, which contributes to the stability of the global economy.
The report indicated that controlling inflation allowed the US Federal Reserve and the European Central Bank, the two most important central banks in advanced economies, to begin cycles of lowering interest rates.
Qatar National Bank expects this monetary easing to support activity at a time when labor markets there begin to slow down, which will have positive effects on developing economies.
In addition, the impact of the new monetary cycle will be greater than the impact of potential headwinds on the global economy. Monetary easing by major central banks in advanced economies will contribute to a global growth performance in 2025 that will be broadly similar to 2024.
When addressing the third factor, the Qatar National Bank (QNB) report considered healthy international trade flows as another major factor contributing to the stability of global growth, considering that despite the ongoing geopolitical tensions, global trade volumes as a percentage of gross domestic product are expected to remain relatively unchanged.
The report emphasized that international trade works to enhance productivity and investment and is therefore necessary for global growth, noting that there is increasing evidence that geopolitical tensions primarily affect trade between geopolitical blocs, which can be compensated for by increasing trade within the blocs themselves, suggesting that This process has gradual effects in the long term, through a decline in market efficiency and a slowdown in the transfer of knowledge and technology.
The report concluded by saying that changes in trade flows will not be large enough in the near term to have significant impacts on global growth, in the absence of an intense trade war between the major economic blocs.
