Goldman Sachs, a multinational investment bank, projects that global economic growth will outperform expectations in 2024 — just as it did in 2023.
The firm made the projection on Friday, in its report titled ‘Macro Outlook 2024: The Hard Part is Over’.
Goldman Sachs said worldwide GDP is forecast to expand by 2.6 percent in 2024 on an annual average basis, compared with the 2.1 percent consensus forecast of economists surveyed by Bloomberg.
“The global economy has outperformed even our optimistic expectations in 2023,” the report said.
“GDP growth is on track to beat consensus forecasts from a year ago by 1pp globally and 2pp in the US, while core inflation is down from 6% in 2022 to 3% sequentially across economies that saw a post-covid price surge.
“More disinflation is in store over the next year. Although the normalization in product and labor markets is now well advanced, its full disinflationary effect is still playing out, and core inflation should fall back to 2-21⁄2% by end-2024.
“In fact, Goldman Sachs Research’s forecasts for GDP growth in 2024 are more optimistic than the consensus for eight of the world’s nine largest economies, as of Nov. 8, 2023.
“And notably, our economists expect US growth to outpace its developed market peers again.”
The investment bank also predicted that they would only limit recession risk and reaffirm a 15 percent US recession probability.
“We expect several tailwinds to global growth in 2024, including strong real household income growth, a smaller drag from monetary and fiscal tightening, a recovery in manufacturing activity, and an increased willingness of central banks to deliver insurance cuts if growth slows,” Goldman Sachs said.
“Most major DM central banks are likely finished hiking, but under our baseline forecast for a strong global economy, rate cuts probably won’t arrive until 2024 H2.”
Goldman Sachs said it expects central banks to leave policy rates above their current estimates of long-run sustainable levels when rates ultimately settle.