Economic slowdown looms worldwide as interest rates climb

Posted on September 22, 2023   |  

The global economy is poised for a deceleration as it grapples with increased interest rates and a less-than-stellar pandemic recovery in China.

Projections indicate a gradual growth rate of 2.7% in 2024, following a somewhat lackluster expansion of 3% in the present year.

Although 2023 began on a robust note, with support from lower energy prices and China's reopening, expectations are for a moderation in global growth.

The effects of stricter monetary policies are starting to manifest, leading to diminishing business and consumer confidence, particularly evident in China.

Factors like a 25% surge in oil prices since May are contributing to inflation concerns, which vary depending on countries' exposure and their role as importers or exporters of oil.

Germany anticipates a 0.2% contraction in 2023, while US growth is projected to taper to 1.3% in 2024, compared to 2.2% in 2023. 

The growth prospects for China have also been notably downgraded, with expected output rising by less than 5% next year, largely due to subdued domestic demand and structural pressures in property markets.