New forecasts for global growth and other economics stories to read this week

The World Bank has cut its 2024 global growth forecast from 2.7% to 2.4% in its latest Global Economic Prospects report. Central bank monetary tightening and increasingly restrictive credit conditions were key factors in the cut, Reuters reports.

However, the World Bank has increased its forecast for this year, predicting that real global GDP will rise by 2.1%, compared with an earlier forecast of 1.7%. The global economy grew by 3.1% last year.

“The world economy is in a precarious position,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. “Outside of East and South Asia, it is a long way from the dynamism needed to eliminate poverty, counter climate change and replenish human capital.

The OECD has also increased its forecast for the global economy over the next year – although only slightly. It has raised its growth forecast for 2023 to 2.7%, up from its March prediction of 2.6%.

It sees more promising prospects for next year than the World Bank, forecasting growth of 2.9%, unchanged from its March forecast.

But like the World Bank, the OECD flagged the ongoing impact of monetary policy tightening.

“Fiscal policy should prioritise productivity-enhancing public investments, including those driving the green transition and boosting labour supply and skills,” said OECD Chief Economist Clare Lombardelli. “Renewed reform efforts to reduce constraints in labour and product markets and to reignite private investment and productivity growth would improve sustainable living standards and strengthen the recovery from the current low growth outlook.”

The Eurozone entered a technical recession in the first quarter of this year, according to new data from Eurostat.

GDP in the 20-country bloc fell by 0.1% in January-March compared with the final quarter of last year. This followed a 0.1% quarter-on-quarter drop in October-December, meaning the Eurozone faced two successive quarters of contraction, which is typically described as a technical recession.

Household spending, public expenditure and inventory changes all had an impact on quarterly GDP, according to the statistics agency.

The Australian economy grew at its weakest pace in over a year in the last quarter, as a result of higher prices and rising interest rates. The country's central bank raised interest rates to an 11-year high on Tuesday (6 June).

Mexico's annual rate of inflation fell to 5.84% in May, the fourth consecutive month of slowing.

Brazilian inflation has also fallen, hitting its lowest mark in over two years. Annual inflation hit 3.94% in May, the first time it's fallen beneath 4% since late 2020.

The Reserve Bank of India, the country's central bank, has kept its key lending rate unchanged for a second policy meeting.

It comes as economists predict Pakistan will also leave its key interest rate unchanged on Monday (12 June).

Moody's, the credit rating agency, has warned that UK house prices are set to fall 10% over the coming two years.

The Bank of Canada has increased its overnight interest rate to 4.75% - a 22-year high. It's expected to follow with a further increase next month.

The probability of a US recession in the next 12 months has fallen to 25%, according to Goldman Sachs. Its economists previously pegged the probability at 35%.

The Turkish lira has hit a record low against the US dollar, as the country's new finance minister pursues a plan of "intentional devaluation", according to the Financial Times.

A new PwC survey looks at how organizations can build resilience, particularly in the face of a "polycrisis". It finds that companies increasingly see resilience programmes as a source of competitive advantage, not just a means to weather the storm.

World Meteorological Organization research says that the total economic costs of weather, climate, and water-related disasters have exceeded $4 trillion over the last five decades.

What are the factors shaping the future of the banking sector? A newly published Banking and Capital Markets Transformation Map explores the key trends.