In 2024, economies and cities across many parts of the world will see a subdued growth environment, with higher-for-longer interest rates and geopolitical uncertainties weighing on consumption, investment, manufacturing and trade. On the upside, easing commodity prices and inflation will give some breathing room for companies and households. While global manufacturing is set to slow down, some markets and sectors could witness growing opportunities, driven by manufacturers’ location diversification efforts.
Below is a summary of our key predictions for the global economy, cities, business environment, industrial production and commodities market for 2024.
Challenges mount as global economy faces further growth slowdown in 2024
Maxim Hofer – Senior Economies Consultant
The global economic outlook for 2024 is marked by a further slowdown in real GDP growth, with expectations set at 2.7%. Higher-for-longer interest rates and depleting savings will slow consumer spending and lower business investment. This will soften labour markets and the services sector, the key pillars of previously resilient growth, in addition to a continuously weak backdrop in global manufacturing and trade.
The growth gap between advanced and developing economies is expected to widen, with the former slowing to 1.1% while the latter will remain stable at 4.0%
Source: Euromonitor International
Major economies, including the US, the Eurozone and China, will each face distinct challenges that keep growth subdued. On the upside, the Asia Pacific region will remain the primary source of global growth, with accelerating momentum in numerous economies including India, Vietnam and Indonesia. Another positive factor is the expected noticeable moderation of inflation globally in 2024 amid economic activity slowing. Yet, the global economy continues to face unusually high uncertainty, as well as risks and opportunities due to several transformative developments, including rising geopolitical tensions and conflict, the reset of globalisation and technological advancements, particularly in artificial intelligence.
Shifting labour market and high interest rates represent ongoing cost pressures for businesses
Lan Ha – Head of Economies
Apart from a stagnant economic growth environment, global businesses will continue to face some labour market shortages in most advanced economies and elevated cost of capital in 2024. Although weakened economic activity and abating inflation have led to softened growth in job vacancies and wages since late 2023, labour supply remains rather tight due to population ageing and robust demand for labour-intensive services.
With 5.3% being forecast for 2024, the unemployment rate across OECD countries will still be lower than the pre-pandemic level
Source: Euromonitor International
Global manufacturing to face challenges but reshoring initiatives offer opportunities
Justinas Liuima, Industrial Insights Manager
The global manufacturing sector is forecast to show slower growth of 2.1% in real terms in 2024, down from 2.6% in 2023. Slower global economic growth and consequently stalling demand for B2B goods will drag down the manufacturing sector’s performance. Manufacturers will continue to face labour market problems, potential trade restrictions and stricter environmental regulations that will add to the slower growth.
Geopolitical risks amplify uncertainty in the global commodity markets
Aleksandra Svidler, Economies Consultant
Following a sharp year-on-year contraction over 2023, commodity prices are expected to ease further in 2024 due to the anticipated slowdown in global economic growth. Tight financial conditions, affecting both private consumption and business investment, are likely to contribute to weaker global demand and trade, curbing commodity price growth.
Rising debt burden to curb urban consumer spending, but emerging cities offer opportunities
Aleksandra Svidler, Economies Consultant
Despite gradually easing inflationary pressures, urban consumers maintain a cautious approach to their spending. As surging mortgage rates and borrowing costs, along with the anticipated softening of labour markets, put further strain on household budgets, urban consumers will continue to prioritise essential spending. For example, the expected real growth in per capita urban spending in North America is projected to moderate to 0.3% in 2024 from 1.4% in 2023. Throughout the region, Vancouver, Calgary and Toronto are expected to experience notable impacts, as Canadian consumers continue to grapple with some of the highest household debt levels globally.
On the other hand, many emerging urban areas, especially in Asia Pacific, continue to offer robust consumption potential amid more resilient economic development and solid demand-side growth.
Bangkok (Thailand), Manila (Philippines) and Ho Chi Minh City (Vietnam) are poised to see some of the strongest growth rates in real consumer spending in 2024 among other tier-1 cities globally
Source: Euromonitor International
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