According to the World Economic Forum (WEF), nearly three-quarters of chief economists expect strong growth in the US this year, up from 59% in January 2024. This suggests that despite high interest rates, the world’s largest economy is not slowing down. Global markets are hoping for interest rate cuts from the US Federal Reserve as inflation decreases.
Nearly seven out of every 10 economists polled by Reuters anticipate a rate cut by the American Central Bank in September of this year. However, if the US continues to experience strong growth and adds new jobs, it could impact the likelihood of a decrease in inflation, further delaying the anticipated rate cut cycle.
The US labor market added 175,000 jobs in April, showing strong growth but slightly below JPMorgan’s estimates. A delay in US interest rate cuts will have repercussions on emerging economies like India as well. The sustained strength of the US dollar may impact exchange rates, export growth, and the global flow of capital into equity and bond markets.
Despite the positive outlook for the US economy, economists in the survey are less optimistic about growth prospects in Europe and China. Three-quarters of economists expect China’s economic growth to slow down in 2024, with the International Monetary Fund projecting a 4.6% growth for China this year. In Europe, geopolitical tensions within the continent and high inflation are expected to result in weak growth for the rest of the year.
The survey also revealed that 97% of economists view geopolitics as a significant source of volatility, with more than 80% believing that domestic tensions will further contribute to volatility in 2024. With elections scheduled in 64 countries, including India,
