The global economy demonstrated remarkable resilience despite facing significant challenges, FinIntell reports. This resilience was primarily driven by robust consumer spending and the reduction in supply chain disruptions, which mitigated the initial threat of a global recession. However, the growth momentum was moderated by prolonged monetary policy tightening during the H1-24, which constrained consumer spending and dampened business confidence.
Overall, regional growth trends were mixed: advanced economies and Sub-Saharan Africa (SSA) saw improved GDP growth while emerging economies experienced slower momentum due to weaker performances in China and India.
Additionally, inflation declined significantly, particularly in the latter half of 2024, supported by enhanced global supply chain efficiency and subdued demand-side pressures from wage growth. In response, Central banks cautiously initiated monetary policy easing cycles, aligning with improved inflation trajectories and improving macro conditions.
Nevertheless, upside risks kept policymakers restrained, especially as inflation remained slightly above target thresholds. Japan emerged as an exception, with the Bank of Japan maintaining a tight monetary policy stance due to entrenched inflationary pressures and currency volatility. In Sub-Saharan Africa (SSA), the moderation of inflationary pressures across the region and the easing of policy rates in advanced economies encouraged Central banks to initiate interest rate cuts to spur growth.
Looking ahead, global growth is poised to remain resilient in 2025FY, supported by real income gains from lower inflation and wage growth, coupled with enhanced business confidence driven by relatively lower interest rates. However, significant downside risks remain. Chief among these is the anticipated policy shift in the United States, with a potential second Trump administration likely to implement tariffs and immigration restrictions, heightening inflation risks and clouding the monetary policy landscape. Additional risks include (1) commodity price volatility likely induced by geopolitical tensions and climate change, (2) the lagged effects of prolonged monetary policy tightening, and (3) weaker-than-expected economic activity in China.
For SSA, sustained structural reforms and improving consumer demand are expected to strengthen growth and market confidence. However, inflationary pressures are projected to remain elevated in the medium term—especially in Nigeria, Ghana, and Angola—compelling Central banks to adopt a cautious approach to monetary policy easing.
For the crude oil market, prices remained volatile as the escalation of geopolitical tensions in Russia, Ukraine, and the Middle East, alongside concerns about oversupply amid soft demand, stoked varying levels of pressure on prices. In 2025E, market balance is expected to favour supply following increased output from both OPEC+ and non-OPEC+ producers.
Additionally, oil demand growth is expected to increase in 2025E as non-OECD demand remains resilient. Market analysts said that based on their assessment of current market dynamics, Brent crude oil price is not likely to sustain above USD80.00/barrel for the rest of 2024. Hence, they align with market expectations and forecast the average price at USD76.00/barrel for 2025E.
