The global economy is in a soft patch. But, despite widespread expectations of a global economic slowdown in 2024, growth and inflation have performed above expectations across most major economies. Divergence has re-emerged as a theme, with individual economies likely to see various growth and inflation experiences going forward.
We believe demand-side resilience has delayed the disinflation narrative across major western economies, particularly in the US. We continue to anticipate falling inflation over the forecast horizon across most economies. Disinflation is likely to happen more quickly in non-US developed market economies. This trajectory may only elicit marginal rate cuts from major developed market central banks though.
The pass-through effect from central bank policy tightening has taken longer than expected and is being felt most at the margins. This includes a modest increase in credit card balances and rising delinquencies in the US.