QNB: Growth of developed, emerging economies to remain resilient

QNB said in its weekly commentary that expects global economic growth to remain resilient in advanced and emerging economies, particularly with easing monetary policy.

According to the report, the global economy has exceeded expectations in 2024, maintaining steady growth despite numerous headwinds. While the forecasted growth rate of 3.2 percent remained below the historical average of 3.6 percent between 2000 and 2023, it comfortably surpassed the 2.5 percent threshold that typically signals recession. QNB said the stability was attributed to three main factors: consistent performance in advanced and developing economies, easing monetary policies by major central banks, and sustained international trade flows.

The report emphasizes the balanced contributions from both advanced and developing economies. Advanced Economies (AE), accounting for 40 percent of the global economy, are projected to maintain a growth rate of 1.8 percent annually in 2024 and 2025. While the United States is experiencing a slowdown, with growth dipping from 2.8 percent to 2.2 percent, improvements in the Euro Area, the United Kingdom, and Japan help offset this decline. Developing Economies (DE) meanwhile, which represent the remaining 60 percent of global output, are forecasted to grow at a more robust 4.2 percent annually over the same period. Though modest decelerations are expected in regions such as Emerging Asia and Developing Europe, these are counterbalanced by recoveries in Latin America, the Middle East, Central Asia, and Sub-Saharan Africa. Together, the steady growth across AE and DE underpins global economic stability.

The bank Monetary policy adjustments by leading central banks have also bolstered the global growth outlook. The U.S. Federal Reserve and the European Central Bank have initiated interest rate cuts after successfully curbing inflation. These measures are expected to stimulate economic activity, particularly as labor markets in advanced economies begin to soften. Additionally, the easing cycle may help mitigate potential risks such as renewed commodity price spikes, financial market volatility, or a deeper slowdown in Chinas property sector. These steps are projected to maintain similar growth levels in 2025.

Meanwhile, international trade remains a cornerstone of global growth. Despite rising geopolitical tensions and the risk of geoeconomic fragmentation, trade volumes as a share of global GDP are expected to remain steady. While geopolitical divisions might limit trade between blocs, intra-bloc trade could potentially rise, cushioning the impact. However, long-term efficiency losses and slower knowledge transfers are possible if fragmentation persists. Importantly, absent a severe trade conflict, trade shifts are unlikely to derail short-term growth trajectories.

QNB concluded by saying that, despite early concerns, 2024 has highlighted the resilience of the global economy. Steady contributions from diverse economic regions, proactive central bank policies, and stable trade dynamics suggest a continuation of this performance into 2025. However, the global economy remains susceptible to external shocks, underscoring the importance of vigilant policy measures and international cooperation to sustain growth.