Global Scenarios Service: Middle East Escalation
Global growth prospects for the year ahead remain weak. We continue to see a prolonged period of steady and unspectacular growth over the coming quarters, despite a slight upward revision to our baseline forecast in the period since our previous Global Scenarios Service report.
Risks to global growth lie to the downside. Recent Global Risk Surveys suggest that businesses are particularly concerned by the potential fall-out from geopolitical tensions, both in the Middle East and between China and Taiwan, and the risk that interest rates stay higher for longer.
Our latest baseline forecast is for world GDP growth of only 2.0% in 2024 and 2.6% in 2025.
This Quarters risk scenarios:
- Middle East Escalation – Global growth falters as energy supply disruption drives oil prices to $150pb, stock markets weaken, and policy rates rise further amid higher near-term inflation.
- Increased China-Taiwan tensions – Tensions weigh persistently on the global economy as Taiwan and its allies raise trade and technological barriers against China and investor sentiment worsens amid conflict fears.
- Higher for longer interest rates – A protracted period of high interest rates weighs on stock markets and house prices, resulting in tighter credit conditions and several years of sub-par growth.
- Excess savings run-down – Early monetary policy loosening fuels an unwind of household savings built up during the pandemic, resulting in a more robust consumer-led recovery.
To find out more, fill in the form to download the executive summary of this quarter’s Global Scenarios report.
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