Morning Market Brief September 27, 2024

Stronger growth expected for global economy

The Organisation for Economic Co-operation and Development (OECD) released its September Economic Outlook. The economic organization believes the global economy is poised for relatively strong growth over the remainder of 2024 and into 2025. Despite tight financial conditions, the global economy has remained relatively resilient and avoided a recession. The OECD now believes stronger growth is on the horizon.

• The OECD expects the global economy to expand by 3.2% over 2024. It also projects economic growth of 3.2% next year. These forecasts are largely in line with its previous outlook released in May.
• The OECD believes economic growth will pick up as softer inflationary pressures lead to more policy loosening by global central banks. Rising real incomes and improving trade activity should also help to boost growth over the remainder of this year and next.
• Economic growth in Canada is expected to increase next year. The OECD expects Canada’s economy to expand by 1.1% this year but increase to a 1.8% expansion next year. The US economy has proven its resiliency in 2024. The report shows that the US economy will grow by 2.6% in 2024 before slowing down to 1.6% in 2025.
• Inflation among G20 countries is expected to drop to 5.4% in 2024, from 6.1% in 2023. The OECD forecasts an inflation rate of 3.3% next year. Core inflationary pressures should also continue to soften.

The OECD believes the global economy is turning from a slow-growth to a higher-growth environment. Central banks are likely to keep lowering interest rates in response to slowing inflation, which could reignite business activity. Canada’s own economic growth is expected to increase. Consumer spending and real estate investment could benefit from lower borrowing costs and softer inflationary pressures.

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