Despite persistent geopolitical tensions, the global economy is expected to keep growing, albeit at a highly moderated pace, in the latter half of 2024, according to the outlook presented on Friday by ING Bank.
Inflation, currently on a downward trend, will be influenced by various factors, including the rising cost of maritime transport - owing to the situation in the Middle East - and the potential return to power of Donald Trump, whose policy proposals are inflationary.
“Nevertheless, by yearend, inflation in both the US and Europe is predicted to be lower than its current state,” ING Bank projects. However, inflation could gain momentum in the long term. “Climate change, the energy transition, and continued deglobalisation are also factors that could keep inflation structurally higher,” notes Chief Economist Peter Vanden Houte.
These factors complicate the decisions of central banks. However, according to ING, “short-term interest rates will continue to fall this year, in both the US and Europe.”
“We predict that the European Central Bank (ECB) will eventually lower its interest rates to 2.50%," the Bank notes. "In the US, in a scenario casting Trump as the winner, we foresee short-term interest rates diving to 4%, which is still relatively high.”
