The Global Risks Report 2024

Supply-driven price pressures Markets are already anticipating interest rate cuts in key economies in the first half of this year.48 However, there are several inflationary pressures that may stymie expectations and present a less-smooth path to inflation targets. If price pressures continue, central banks could be hesitant to cut rates in response to signals of weaker growth, resulting in higher-for-longer inflation and interest rates. Reflecting tighter financial conditions, both headline and core inflation have dropped in the United States and the Eurozone (Figure 1.17). 49 In parallel, there has been a slowdown in economic growth in key industries and markets. The global economy had been propped up by continued strength in services throughout 2023, which is now flagging, while manufacturing has already been in contraction for over a year (Figure 1.18). 50 Economic growth is stagnant in the European Union, at 0.6% last year, with estimates suggesting that the economic powerhouse of Germany contracted by 0.3% in 2023. 51 Profits of the S&P 500, excluding the ‘Magnificent 7’ tech stocks, were estimated to contract by 8.6% last year. 52 United States ChinaEuropean UnionAnnual percent change Core inflation rateInflation rate, average consumer prices (Annual percent change)/Core inflation rate+2+4+6+8+10 0 -2 2019 2024 2015 2016 2017 2018 2020 2021 2022 2023Inflation FIGURE 1.17 Source IMF, 2023; Trading Economics, 2023. PMI Services Business Activity Index PMI Manufacturing Output IndexPMI CompositeOutput IndexGlobal Purchasing Managers’ Index515253545556 47 484950Index value Jan 2023Nov 2023Jan 2022Apr Jul Oct Apr JulGlobal Purchasing Managers' Index (PMI) FIGURE 1.18 Source S&P Global, 2023. Global Risks Report 2024 29