The decade beginning in 2012 has brought the world to a near-perfect economic equilibrium, but a decade later, we are faced with the same challenges, and 2024 is set to follow a similar pattern. A slow global economy, high unemployment, and hyper-partisan politics are a few of the problems we must deal with.

Global economy projected to grow 5.5% in 2023

Despite some headwinds, the global economy is still expected to grow at a healthy pace in 2023 and beyond. Rising inflation, new COVID-19 infections, and lingering supply-chain issues are all likely to dampen growth. However, global output is expected to grow by 5.5 per cent in 2022, compared with a projected 4.0 percent increase in 2023 and 3.5% in 2024.

The World Bank has downgraded its growth forecast for next year, but the United Nations is still predicting an annual increase of 5.5%. This is despite the fact that major economies are expected to slow down this year. In addition, the resurgence of Covid infections is expected to disrupt economic activity in the near term, and more serious problems will emerge if the virus continues to spread.

Moreover, the war in Ukraine has triggered a costly humanitarian crisis. Economic damage from the conflict is expected to slow growth in the next two years. The conflict is likely to lead to higher prices for food and fuel, which will hit vulnerable populations the most. According to the conference board, global growth is expected to slow to 3.6 percent in 2023 and 3.3% in 2024, with a decline to 3.3 percent in the medium term.

Global growth in 2022 slowed to 5.5%, while growth in developing economies will slow to a more moderate pace of 3.8 percent in 2023. This decline coincides with a widening gap between advanced and emerging economies. While growth in advanced economies is likely to slow to a modest pace, it will return output and investment to pre-pandemic levels. In the meantime, the slowdown in developed economies is expected to dampen growth in emerging economies.

4.2% in 2022

While US financial predictions have been a little shaky, one factor that is proving to be highly successful is the labor market. While the total number of non-farm payrolls has recovered from its April 2020 low, it remains 4.2 million below its pre-pandemic peak. Meanwhile, the labor force participation rate has been moving sideways since August. Although this is still well below its pre-pandemic high, it is likely to rise in 2023.

The global economy is also being impacted by the generalized tightening of monetary policy. This has largely been attributed to the fact that global inflationary pressures have soared above expected levels. Furthermore, China’s zero COVID-19 policy is also having a significant effect on the world economy. As a result, China is expected to post a slowdown of 3.2% in 2022. At the same time, inflationary pressures are spreading to other sectors, with businesses passing on higher costs. The US economy has already experienced this phenomenon, but it has now spread to the euro zone and Japan as well.

According to the BLS, the United States economy is expected to grow at an average rate of 2.6 percent annually from 2012 to 2022. This is equivalent to a 1.1 percent increase in personal consumption. As a result, the unemployment rate will remain low, and household employment will increase by around 12.3 million over the next two years. In addition, productivity growth will remain strong at two percent per year, contributing to output growth. Moreover, housing starts are expected to average 1.6 million annually, helping to meet the demand for new housing and renovating aging structures.

Bank of Canada’s policy rate set to reach 1.75% by year-end 2024

The Bank of Canada is on track for a five-rate hike in 2022, a move that is likely to further tighten the economy. In July, Statistics Canada reported that annual inflation was 7.6%, down from 8.1% in June. While the rate of inflation was still above the central bank’s 2% target, annual growth in the cost of gasoline moderated to 35.6% in July from a high of 54.7% in June. However, this slowdown was not enough to slash consumer spending. With rising costs, businesses are passing on the higher cost to consumers.

The Bank of Canada’s rate hikes are largely based on a consensus, unlike some central banks, which use individual votes. It has recently raised its policy rate three times this year, which came amid solid global and neighbouring US growth. In addition, the new USMCA agreement, which replaces the North American Free Trade Agreement, is expected to ease the uncertainty over trade between the two countries.

In Canada, the Bank of Canada’s policy rate is set at the upper limit of the operating band for the money market overnight rate. At the start of the year, the rate was at zero percent. But the Bank of Canada’s policy rate is now at 2.5%, signaling that it will need to keep rising. Most economists had expected the Bank of Canada to increase the policy rate by 75 basis points, and markets had priced in this increase.