Economic Environment in 2024¹

Economic momentum slowed at the end of 2023. We expect that this weak phase will continue in the first half of 2024 and that growth will only accelerate somewhat over the course of the year. Overall macroeconomic growth in the E.U. is expected to remain at a low level in the year’s average. By contrast, we expect a slowdown on average over the year in North America and Asia.

Uncertainty about future developments remains high. The purchasing power of private households is on the rise due to wage increases in the previously resilient labor markets of Northwestern Europe and the United States. However, interest rates are likely to remain high despite decreasing inflation rates in the United States and Europe. This has a negative impact on growth in capital expenditures and construction investments and dampens the ability of private households to spend on interest-sensitive consumer goods. Recovery in China is extremely volatile, particularly with regard to the stability of the real estate sector and the development of the labor market. The geopolitical situation remains tense, especially in light of the wars in Ukraine and the Middle East. In our forecast, we assume that these conflicts will not escalate further in 2024, but we also do not anticipate a fundamentally positive turnaround.

Trends in the global economy in 2024

We expect GDP growth to remain largely unchanged in the European Union (E.U.) (2024: +0.8%, 2023: +0.5%). As catch-up effects in tourism are weakening and demand for goods is expected to stabilize, we forecast growth rates to converge more strongly in Western Europe. While Germany is expected to grow by 0.3% again in 2024 following the slight decline in GDP (2023: –0.1%), we anticipate growth in France (+0.8%) and Italy (+0.5%) to remain largely unchanged. In Spain, however, the economy is likely to cool (2024: +1.4%, 2023: +2.5%). GDP growth in the Eastern E.U. countries is expected to accelerate somewhat as the high inflation rates and interest rates should decrease noticeably (2024: +2.1%, 2023: +0.5%).

In the United Kingdom, we expect growth to remain weak (2024: +0.4%, 2023: +0.5%), as the higher interest rate level is increasingly reflected in mortgage interest rates for private households. In view of the high home ownership rate and shorter fixed-interest periods, this effect is generally stronger in the United Kingdom than in other European countries.

Following strong growth in 2023 (+2.5%), we expect a slowdown in the United States (2024: +1.8%). Here too, the persistently high level of interest rates will slow down growth in private consumption as well as capital expenditures and construction investments. Furthermore, the depletion of savings built up during the coronavirus crisis is increasingly unable to support consumption. The forbearance of student loan repayments, which was introduced during the coronavirus pandemic, ended in fall 2023 and is now placing an additional burden on private household budgets.

We expect economic recovery in China to continue. Due to the higher starting point, however, growth in 2024 will slow compared with the previous year (2024: +4.5%, 2023: +5.2%). The international economic environment remains weak and exports are therefore not expected to provide any strong growth stimulus overall. Domestic demand continues to be burdened by the crisis in the real estate sector and tight public budgets at provincial level. Private household consumption is expected to grow only moderately in this environment.

In the other emerging markets of Asia, we expect stable growth overall (2024: +4.9%, 2023: +4.7%) against the backdrop of largely constantly growing domestic demand and the gradual recovery in export demand from China. In India, growth momentum is expected to slow slightly, mainly due to a slowdown in investment growth in an environment of higher interest rates (2024: +6.2%, 2023: +6.5%).

We expect weaker growth in Japan (2024: +0.8%, 2023: +1.8%), as exports are growing more slowly now that the recovery effects in the automotive industry have come to an end and import prices for raw materials and precursors have risen due to the weaker yen. By contrast, the growth rate of private consumption should remain stable, as real incomes are rising moderately.

Growth in South America is expected to weaken in 2024 (2024: +1.0%, 2023: +1.4%). Growth in the region is being supported by declining inflation rates in most countries and falling interest rates in many countries. This is offset by narrower fiscal leeway. Particularly in Argentina, further consolidation measures are required to fight hyperinflation and stabilize the currency and to restructure public finances.

Outlook for gross domestic product 2024

Real change compared with previous year

Trends in gross domestic product 2024 – 2026

Average annual real change