The Age of Rising Resilience – An Economic Outlook

May 31, 2024 2 mins

The Age of Rising Resilience – An Economic Outlook

Professor Trevor Williams analyses the latest indicators and what they mean for the UK — and global — economy.

After bouncing back from the pandemic in 2020, global growth took a hit in 2022 after Russia invaded Ukraine, reaching a trough in the fourth quarter of 2022 before staging an uneven but increasingly robust recovery since then.

According to International Monetary Fund (IMF) data, global growth was 3 per cent last year and is likely to be at a similar pace this year and then accelerate in 2025. That is a remarkable level of resilience to the uncertainties that prevail in the world economy. Organisation for Economic Cooperation and Development (OECD) data shows that the world's top 20 economies grew in 2023 — apart from a modest reduction in Germany and Saudi Arabia and Argentina's 2 per cent drop.

The expectation for 2024 is that all the G20 economies and the countries in the OECD and European Union will expand, with a similar geographical outlook for 2025. The pace of growth will likely be faster due to lower price inflation, which will allow for lower interest rates. That combination will boost manufacturing and service activity through this year and next.

However, the outlook is not without risk; significant uncertainties exist worldwide. There are ongoing conflicts in Africa and Europe, and the risk is that the conflict in the Middle East will expand to more countries. Geopolitics poses risks and the potential for more fractured politics in Europe and the U.S. There are elections in more than 70 countries this year, accounting for over half the world's population. Many of these will be neither free nor fair.

3%

Global growth was 3 per cent last year and is likely to be at a similar pace this year and then accelerate in 2025

Global growth in 2023 Source: IMF

Technology will create new and different jobs. How do you adjust your economy to take advantage of that?

Trevor Williams

Visiting Professor, University of Derby; Co-founder, FX Guard; and Former Chief Economist, Lloyds Bank

Issues around the fast pace of technological change (such as cyber security, AI adoption, and disruption), changes in population trends that are already being felt (including a shortage of workers and immigration toxicity), and the increased impact of climate change (which will raise questions over mitigation/adaptation costs, unpredictability, and who pays) have increased risk and uncertainty.

However, recent experience shows that the world economy and trade remain remarkably resilient to these shocks thus far.

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