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Global inflation continued to ease, giving hints of loosening of central bank interest rates in 2024. The global headline rates of inflation are projected to reach 4.8 per cent, a sharp decline from 5.9 per cent in 2023 and 9.2 per cent in 2022, chief economists at World Economic Forum said in a report.
Core inflation is decelerating too, albeit at a slower pace, and is expected to reach 4.5 per cent in 2024. Core inflation is the change in the costs of goods and services, barring those from the food and energy basket. The improvement in inflation expectations is particularly marked for Europe and the US, with the share of respondents that World Economic Forum interacted with expecting high or very high inflation declining respectively from, 71 per cent and 47 per cent in September to only 13 per cent in the latest survey. The survey was conducted in November-December 2023. However, two-thirds of chief economists still expect moderate inflation in Europe and the US. China remains an outlier in the other direction, with 76 per cent of respondents still expecting low or very low inflation, the World Economic Forum report noted. Elsewhere in the world, the expectations for lower inflation strengthened, including East Asia and Pacific (30 per cent), Central Asia (21 per cent), and South Asia (19 per cent), with the majority expecting moderate inflation. Despite a significant improvement in the outlook and broadly moderate expectations, more than a quarter of respondents still expect high or very high inflation in Sub-Saharan Africa (36 per cent), Latin America and the Caribbean (26 per cent), Middle East and North America (25 per cent). Faced with high inflation after the onset of COVID-19 and the war that broke out between Russia and Ukraine in 2022, central banks the world over have taken to raising interests to manage inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. Talking about the economic outlook, the report noted that the uncertainty that dominated the outlook over the last year continues to cloud near-term economic developments: 56 per cent of chief economists expect the global economy to weaken over the next year, but another 43 per cent foresee unchanged or stronger conditions. "While there are positive developments, such as easing inflationary pressures and advances in the field of artificial intelligence (AI), businesses and policy-makers face persistent headwinds and continued volatility as global economic activity remains slow, financial conditions remain tight and geopolitical rifts and social strains continue to grow," the report noted. Notably, the most buoyant economic activity is expected in South and East Asia. In the US and the Middle East and North Africa, the outlook has weakened since the September 2023 edition of the Chief Economists Outlook, with about six out of ten respondents expecting moderate or stronger growth this year. In Europe, 77 per cent expect weak or very weak growth in 2024. Elsewhere in the world, the expectations are for broadly moderate growth, it asserted. (ANI)
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