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Growth, inflation, and rates to be lower than expected

We think that global growth will undershoot consensus expectations in 2024 as the lagged effects of monetary policy tightening filter through. Among the advanced economies, the US will continue to outperform Europe. And while China’s policy-induced recovery is set to continue in the near term, strong structural headwinds will put the economy back on a weaker track by the second half of 2024. The subdued growth environment is likely to bring inflation back to central banks’ targets sooner than most anticipate. Accordingly, central banks should be able to cut interest rates back to more neutral levels almost across the board. Upcoming elections won’t be a game-changer for global growth, but some may influence how the world economy continues to fracture along geopolitical lines.

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