Macroeconomic Outlook

Global Economic Outlook

In 2024, the effects of tight monetary policies implemented to combat inflation in global economies began to materialize, and steps towards monetary easing were initiated. In this context, the final quarter of the year witnessed interest rate cuts by major central banks, led by the U.S. Federal Reserve (Fed). Throughout 2024, elections that affected half of the world’s population were held, with the U.S. presidential election in November standing out as the most prominent. Heightened geopolitical risks stemming from the Middle East and the ongoing Russia–Ukraine war and their impact on energy markets were closely monitored. In the World Economic Outlook report published in the fourth quarter of 2024, the International Monetary Fund (IMF) stated that significant progress had been made in the fight against inflation and projected that global inflation could decline to 3.6% by the last quarter of 2025. While maintaining its global growth forecast at 3.2% for 2024, the IMF slightly revised its 2025 forecast downward by 0.1 percentage points to 3.1%. According to the OECD Economic Outlook Report, global economic growth is expected to reach 3.2% in 2024 and 3.3% in 2025 and 2026. These projections indicate a broadly stable growth trajectory for the global economy over the next two years.
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The Federal Reserve began to ease its long-standing tight monetary policy in the second half of 2024. In the year’s final quarter, the Fed implemented a total interest rate cut of 50 basis points, lowering the federal funds target rate to the 4.25%–4.50% range. Fed Chair Jerome Powell noted that monetary policy was gradually moving toward a neutral stance and emphasized that future policy decisions would not follow a preset path. He also acknowledged that achieving the 2% inflation target might take another one to two years, although progress was being made. Following the December meeting of the Federal Open Market Committee (FOMC), the Fed’s signals that the pace of its monetary policy easing cycle could slow triggered risk perceptions in the markets. The dot plot reflecting FOMC members’ interest rate expectations pointed to two rate cuts totaling 50 basis points in 2025. In the fourth quarter of 2024, Donald Trump’s re-election as President of the United States heightened uncertainties surrounding the Fed’s monetary policy and the global economic landscape. Although Trump’s economic agenda is expected to support growth through tax cuts, uncertainty surrounding trade policies and the prospect of protectionist measures may intensify inflationary pressures. These risks have reinforced expectations of more limited interest rate cuts in 2025. This could result in policy rates remaining higher for longer.
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In the final quarter of 2024, one of the main economic topics in the EU was the trajectory of the disinflation process. The European Central Bank (ECB) conducted its fourth interest rate cut of the year 2024, reducing the deposit facility rate to 3%. ECB President Christine Lagarde emphasized that a data-driven approach would continue in the coming year and stated that inflation in the Euro Area was on track to reach the ECB’s 2% target. The ECB revised its inflation projections to 2.4% for 2024 and 2.1% for 2025. Nonetheless, external factors such as escalating geopolitical tensions, rising energy prices, and increasing risks in global trade could put additional pressure on the Euro Area economy. A deepening of economic challenges in Europe may necessitate further monetary easing by the ECB.
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Shifting policies and mounting risks continued to shape global economies. Financial conditions in emerging markets have tightened further due to the potential changes in U.S. trade tariffs. The re-election of Donald Trump as President is expected to pose economic challenges for countries such as Mexico, South Africa, China, and other Asian economies. The currencies of these countries have already started to depreciate against the US dollar. Trump’s anticipated implementation of more aggressive tariffs on China is viewed as a major threat to the Chinese economy, potentially exacerbating global trade tensions and deepening existing trade disputes. In response to increased tariffs and a slowing economy, the Chinese government announced its intention to adopt a more accommodative monetary policy in 2025 to stimulate economic growth. This signals that China is preparing to take steps to support its economy in the face of mounting challenges.