Quarterly Bulletin June 2024

DOMESTIC ECONOMIC ACTIVITY EXPANDED DURING THE FIRST QUARTER (JANUARY – MARCH) OF 2024.

International Economic and Financial Developments

1. Global economic growth remained resilient during the first quarter of 2024, despite tight monetary policies. High interest rates continued to exert pressure on both domestic and international demand. However, some Advanced Economies (AE’s) benefited from strong labour markets and healthy household balance sheets, which will contribute to growth but slow down disinflation. Global inflation has declined since mid-2022 but remains sticky due to oil price increases, labour market tightness, and wage growth outpacing inflation in developed economies. Ongoing conflicts in the Middle East have disrupted trade and increased oil market volatility. While El Niño has subsided, concerns emerged about crop damage and potential food price increases due to hot and dry weather conditions in early 2024. Despite global interest rates peaking, central banks have remained cautious about initiating rate cuts due to possible inflation outlook shocks. The Euro Area, United Kingdom, China, Brazil and Russia all experienced higher growth in their GDP during the first quarter of 2024. Although the US and India registered a moderate decline in GDP growth during the quarter, economic activity in the two countries proved to be resilient.

2. Going forward, global real GDP growth is expected to remain steady in 2024 and 2025. The International Monetary Fund (IMF) projects global GDP growth to remain steady at 3.2 percent in 2024 and 2025. Key factors that may hinder growth include tight monetary policies and reduced fiscal support, as well as the long-term effects of the COVID-19 pandemic. The growth outlook for the Advanced Economies (AEs) is forecast at 1.7 percent in 2024. GDP growth in the Emerging Market and Developing Economies (EMDEs) is anticipated to moderate in 2024, to 4.2 percent. GDP growth for sub-Saharan Africa (SSA) is however expected to increase from 3.4 percent in 2023 to 3.8 percent in 2024 and 4.0 percent in 2025. This projection reflects the diminishing impact of previous weather-related challenges and a gradual improvement in supply-related challenges. Downside risks to global economic projections include escalating conflicts in the Middle East and Eastern Europe, which could lead to price volatility and disruptions in commodity markets. Other risks include financial strain caused by high real interest rates, persistent core inflation, lower-than-expected activity in China and trade fragmentation. Furthermore, extreme weather events such as floods and droughts, combined with general climate swings, may add to food inflation, worsening food insecurity and impeding the global disinflation process.