12 minute read 19 Jan 2024
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Global economic outlook: finding balance in 2024

Gregory Daco

EY-Parthenon Chief Economist, Strategy and Transactions, Ernst & Young LLP

Inclusive leader. Passionate about how economics can help organizations navigate an uncertain world. Husband and dad. Judo black belt, competitive triathlete and avid traveler.

Marek Rozkrut

EY EU & CESA Chief Economist; EMEIA Economists Unit Head

Passionate economist and quantitative analyst. Fascinated by big data. Keen runner and mountain climber.

12 minute read 19 Jan 2024

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The 2024 global economic outlook includes a search for equilibrium amid lingering turbulence and volatility as policymakers try to maintain a soft landing.

In brief

  • After proving more resilient than expected in 2023, the global economy will be searching for equilibrium in 2024.
  • The EY global economic outlook calls for sub-trend growth, but no recession, with modest growth in advanced economies and moderate momentum in emerging markets.
  • Potential challenges may still be seen in inflation and labor markets. Fiscal and monetary policy, technology and financial markets may still appear on edge.

The global economy proved to be more resilient than anticipated in 2023. At 3%, global GDP growth surpassed consensus expectations by 1 percentage point. This outperformance was even more remarkable in that it occurred despite the fastest monetary policy tightening cycle in four decades, severe banking sector stress, wars in Ukraine and Israel, and a brief but severe tightening of financial conditions in the fall.

The key drivers behind this solid global economic performance were stronger labor market growth supporting a rebound in inflation-adjusted income growth, a delayed rebalancing in the growth mix driven by services, a much less severe drag from tighter monetary policy thanks to healthy household and corporate balance sheets, and fiscal policy support in some economies.

What was even more amazing was the fact that this economic outperformance was accompanied by a notable decline in global inflation. As we anticipated last year, easing supply constraints, reduced labor shortages, cooling energy prices and moderating demand growth have led to a notable easing of inflation pressures. Gone are the days of fearing a wage-inflation spiral and a high-inflation regime.

But, while there would appear to be much to celebrate, most measures of consumer and business morale point to a generally depressed environment. The main reason behind this disconnect can be explained by several factors including cost fatigue – whereby cost levels for goods, services, labor, and capital are much higher than before the pandemic – the prevailing recessionary narrative through 2023, and social media amplification of negative news.

Download the detailed 2024 global economic outlook 


Global economic outlook: top five themes in 2024

The global economic outlook for 2024 looks to be one steeped in transition. The key theme will be the search for equilibrium, marked by a collective effort to find a new normal. Economic turbulence and volatility are unlikely to fade, but business leaders, investors, consumers and policymakers are likely to find better balance in a world where inflation, labor markets, fiscal and monetary policy, technology and financial markets still appear on edge.

While the challenge for economies worldwide in 2023 was to ensure a soft landing, the question policymakers, businesses, and individuals must ask in 2024 is whether the runway is long enough to sustain that soft landing. 

The 2024 EY global economic outlook calls for cautious optimism. The year may well be a turning point, a period of transition to a new state of balance. Here are our top five themes for the year.

1. Sub-trend global growth but no recession

In 2024, we anticipate moderate global GDP growth around 2.8% – in line with its 2019 performance but below the expected 3.0% advance in 2023. We expect the composition of this growth to be mixed, with modest growth of around 1.3% in advanced economies, and moderate momentum of about 3.8% across emerging markets. 

We foresee the US economy advancing a moderate 1.8% in 2024 with a deceleration in the first half of the year and a reacceleration in the second half. We anticipate growth around 0.8% in Europe with Eastern European economies still benefiting from a catch-up effect while Western and Southern euro area economies grow at an unspectacular but positive pace. 

Most emerging economies are expected to grow below trend with China likely to fall short of the ambitious 5% GDP growth target despite supportive policy stimulus. 

2. Agility amid dueling headwinds and tailwinds

The notable growth headwinds in 2024 will come from weaker employment growth, persistently elevated prices and wages, high interest rates, tighter credit conditions and fiscal consolidation across most major economies with the notable exception of China. 

Still, there is room for optimism in that labor markets could once again prove more resilient than anticipated, supporting stronger income growth and consumer spending. And, while price levels will remain elevated, inflation will be easing and central banks will be cutting rates, providing a tailwind for households, corporations and investors.

With the value and cost of labor having increased significantly post-pandemic and the cost of capital likely to remain elevated, we foresee an increased strategic emphasis by business executives in driving stronger productivity growth. The urge to improve efficiency and invest in cutting-edge technologies such as generative AI (GenAI) could provide the global economy with both a cyclical and structural tailwind. Explore the economic opportunities, risks, and key considerations for business leaders presented by GenAI in our series on the economic impact of AI.

3. Ongoing disinflation

The combination of easing supply constraints, moderating final demand, rebalancing labor markets and cooling rents should lead to further global disinflation in 2024. Advanced economies should see inflation approach central bank targets by mid- to late-year while inflation in large emerging markets in Latin America and Asia has largely converged back to pre-pandemic levels.

4. Central banks pivoting cautiously

Easing inflation and slowing economic momentum will push central banks to pivot away from their tightening stance. Still, given lingering fears of inflation resurgence, we believe developed markets’ central banks are likely to wait until there is undeniable evidence of inflation sustainably moving toward their targets before cutting policy rates. This means rate cuts are unlikely until the spring or early summer. Importantly, once the policy recalibration cycle is complete toward the end of 2025, we foresee rates being higher than in the pre-pandemic decade.

The Bank of Japan (BoJ) is likely to move in the other direction by exiting its yield curve control policy. Meanwhile, across emerging markets we see most central banks in Latin America easing monetary policy ahead of the Federal Reserve and European Central Bank while central banks in Asia largely follow in the Fed’s footsteps. In China, monetary policy is likely to remain accommodative to support growth.

5. Fiscal consolidation and geopolitically restrained trade

Fiscal sustainability is likely to feature prominently on policymakers’ agendas in 2024. We anticipate fiscal consolidation in most advanced economies resulting from a renewed focus on budget deficits in a high interest rate environment and the expiry of energy crisis support measures in Europe. Fiscal tightening is also anticipated in most emerging markets, although the adjustments may be less pronounced than in advanced economies.  

Global trade flows are likely to remain constrained in this subdued economic growth environment with services likely outpacing merchandise trade. Rising geopolitical fragmentation represents a notable cyclical and structural risk to the outlook, especially in a year where voters in markets accounting for about 54% of the global population and nearly 60% of global GDP will go to the polls.

Four strategies for business leaders to thrive in 2024

These four strategies suggest a holistic approach, considering both the internal adjustments within the company and the external economic and geopolitical landscape. Business leaders are encouraged to continuously assess and adapt their strategies to position their firms for growth despite the uncertainties.

  • Enterprise Reimagined: To adapt to the global economic outlook, there is a need for a comprehensive transformation of the enterprise. This includes learning from past crises, conducting strategic refreshes, reviewing portfolios, and transforming labor, supply chain, and technology practices to be more resilient and adaptable.

  • Accelerating investment in innovation: A super-cycle of technology-enabled innovation, particularly that driven by generative AI, calls for significant investment. Leaders need to secure capital that is focused on building the enterprise of the future, keeping up with advancements and integrating them into their business models.

  • Embracing agility: Business leaders should focus on flexible planning that incorporates various economic scenarios and dynamic price modeling. This means staying nimble and being able to pivot strategies quickly in response to changing market conditions.

  • Enhancing profitability: To fund future transformations, businesses will need to rationalize internally, take initiatives to reduce costs, and possibly undertake divestitures. This will create opportunities to improve financial operations, and strategic and transactional decision-making, all aimed at enhancing profitability.

Country and regional expectations 

  • US

    The odds of the US economy entering a recession in the next 12 months are higher than usual, around 40%, but while a slowdown is nearly inevitable, a recession is by no means guaranteed. We see three key headwinds for the US economy in 2024: cost fatigue, elevated interest rates, and slowing job growth. At the same time, three tailwinds will simultaneously support activity: the avoidance of a labor market retrenchment, easing inflation and labor costs compression, and the Fed cutting interest rates by at least 100 basis points (bps) in 2024. In this context, we foresee real GDP growing a moderate 1.8% in 2024 following expected growth of 2.5% in 2023.

  • EU

    The eurozone economy remains in stagnation. Economic activity is expected to gradually rebound going through 2024, supported by a decline in inflation, a gradual increase in external demand, further step-up in government investment and the diminishing effects of monetary tightening. Still, due to weak carry-over from 2023, annual average growth will remain modest in 2024 at 0.8%, following expected growth of 0.5% in 2023. Growth across the region won’t be homogenous as Germany continues to lag Southern Europe. With inflation easing faster than initially anticipated and reaching 2% by 2024 Q2, the ECB is likely to cut rates by 100bps this year, starting in April.

  • UK

    Economic activity remains subdued in the UK with real GDP likely to stagnate in Q4 2023, after a contraction in Q3. Fiscal consolidation along with the lagging impact of tighter monetary policy are likely to constrain real GDP growth to 0.9% in 2024, following a likely 0.3% expansion in 2023. Still, the combination of rapidly easing inflation and the Bank of England cutting rates by 100bps or more starting in the summer will likely favor an economic rebound through 2024.

  • Japan

    Economic activity remains modest in Japan with moderate consumer spending, constrained business investment and a challenging global economic backdrop weighing on growth. Consumer spending is expected to rebound slowly, bolstered by a gradual improvement in real incomes stemming from higher wages and lower inflation. We anticipate real GDP growth around 0.8% in 2024, following a stronger expansion of 1.7% in 2023. The BoJ is likely to exit its yield curve control policy before year-end providing support to the Yen.

  • Australia

    The Australian economy is experiencing a period of below-trend growth as a direct response to the Reserve Bank’s (RBA) monetary policy tightening. The labor market continues to look robust with the unemployment rate at 3.9% in November, but inflation is still well above the RBA’s inflation 2%–3% target band suggesting more policy tightening is possible. We anticipate the Australian economy will grow 1.9% in 2024 after a likely 2.0% expansion in 2023.

  • India

    Amidst the volatile global economic environment, the Indian economy continues to exhibit resiliency thanks to strong domestic demand. The economy recorded a robust 7.7% YoY growth in the first half of fiscal year 2024 (which runs from April 2023 to March 2024) driven by investment and government consumption. We foresee growth around 6.7% for the full fiscal year and easing to 6.3% in fiscal year 2025. The RBI is expected to hold off on rate cuts until the spring as inflation only gradually eases toward 4%.

  • China

    Economic activity remained mixed at the end of 2023 with structural and cyclical headwinds weighing on employment growth, retail spending and real estate activity. We foresee real GDP growth around 4.5% in 2024 after a 5.2% advance in 2023. Fiscal measures supporting high-tech industries, manufacturing and consumer outlays should provide the impetus to growth, but despite low consumer price inflation and producer price deflation, any monetary policy easing will be limited and targeted.

  • Latin America

    Economic growth across the LatAm region is expected to slow in 2024 as slower growth in the US, still elevated interest rates and an abrupt fiscal tightening in Argentina weigh on activity, while tailwinds from fiscal expansion and strong harvest season in Brazil fade. Inflation is expected to stabilize close to 4%, except for a further spike in Argentina. Monetary easing, initiated in the latter part of 2023, will continue at a relatively fast pace. Inflation risks are tilted to the upside and growth risks to the downside because of potential geopolitical instability and El Niño effects.


    Economic growth is expected to accelerate modestly this year in the ASEAN economies as lower inflation supports domestic demand. Lower food and energy prices along with better supply conditions should support easing inflation in 2024 (even if El Nino represent an upside risk) allowing central banks to ease monetary policy. Monetary policy loosening should also stimulate interest-rate sensitive sectors like housing.

  • Middle East and North Africa

    GDP growth in MENA should pick up in 2024, following a downturn in 2023 as global monetary tightening and oil supply cuts weighed on oil exporting economies. Tourism and government support should drive robust growth in the non-oil sector, while inflation will decline in line with the global trend.

  • Sub-Saharan Africa

    The general macroeconomic outlook for Sub-Saharan Africa is relatively strong, notwithstanding some economic pressures – particularly in the larger economies. Economic activity is predicted to be bolstered moderately due to returns from large infrastructure projects (like Angola’s Lobito corridor logistics project, and Nigeria’s Dangote Refinery initializing in Q1 of 2024). These gains are expected to be partially offset by currency devaluations, excessive public debt levels, modest global economic growth and high, but declining inflation and interest rates. 


The 2024 global economic outlook is centered on the search for equilibrium after outperforming in 2023. Our five key trends include sub-trend growth but no recession, dueling headwinds and tailwinds, increased productivity with help from AI, and a cautious pivot by central banks.

Additional EY contributors to this report include:

  • Maciej Stefanski, Senior Economist – Global and EMEIA, EY Polska
  • Mauricio Zelaya, EY Canada Partner and National Economics Leader
  • Peter Arnold, EY UK Chief Economist
  • Cherelle Murphy, EY Oceania Chief Economist
  • Bingxun Xeng, Economic Advisory Leader Singapore 
  • Angelika Goliger, EY Africa Chief Economist
  • Armando Ferreira, EY Economic Advisory MENA Leader
  • Pramod Chowdhary, Senior Manager, EY Global Delivery Services India LLP
  • Dan Moody, EY-Parthenon Director, Ernst & Young LLP

About this article

Gregory Daco

EY-Parthenon Chief Economist, Strategy and Transactions, Ernst & Young LLP

Inclusive leader. Passionate about how economics can help organizations navigate an uncertain world. Husband and dad. Judo black belt, competitive triathlete and avid traveler.

Marek Rozkrut

EY EU & CESA Chief Economist; EMEIA Economists Unit Head

Passionate economist and quantitative analyst. Fascinated by big data. Keen runner and mountain climber.


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