Goldman Sachs anticipates that the global economy will surpass expectations in 2024, driven by robust income growth and confidence that interest rate hikes have already concluded.
The investment bank expects the global economy to expand by 2.6% next year on an average annual basis, surpassing economists' surveyed by Bloomberg, who predicted a 2.1% growth.
Goldman Sachs suggests that the United States is likely to outperform other advanced markets once again, with an estimated growth of approximately 2.1%, according to a report by CNBC that was reviewed by Arabic business sources.
The bank also believes that the major impediment resulting from tightening monetary and fiscal policies has likely come to an end.
The U.S. Federal Reserve initiated its strong campaign to raise interest rates in March 2022 as inflation reached its highest levels in 40 years.
Federal Reserve Chair Jerome Powell stated last Thursday that he is "uncertain" whether the Reserve has done enough to address inflation, hinting that further interest rate hikes may be necessary.
Goldman Sachs suggests that policymakers in advanced markets are unlikely to cut interest rates before the second half of 2024 unless economic growth turns out to be weaker than expected.
The bank points out that inflation is also slowing down in the Group of Ten economies and emerging markets, and further declines are expected.
"We still see recession risks, but they are limited, and we reiterate the possibility of a recession in the United States at 15%."
The bank reduced its expectations for a recession in the United States from 20% to 15% in September based on slowing inflation and a flexible job market.
The bank expects the economies of the United States, the Eurozone, and China to grow by 2.4%, 0.5%, and 5.3%, respectively, by the end of the current year on an annual basis.
Meanwhile, the German economy is expected to contract by 0.1% during the same period.
In contrast, the bank expects a slowdown in the economies of the United States and China next year to 2.1% and 4.8%, respectively. The Eurozone's economy is likely to grow by 0.9% in 2024.
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