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According to Allianz Trade’s updated Global Economic Outlook
Report for the second half of 2024, geopolitical tensions present
significant downside risks to the forecasted economic scenario.
Key risks highlighted include:- The potential for increased pro-
tectionism in the U.S. if Donald Trump were to win the 2024
presidential election, which could affect both domestic and global
markets. - High political uncertainty in major European coun-
tries such as France, Germany, Belgium, and the Netherlands. -
Ongoing conflicts in Russia-Ukraine and the Middle East, as well
as tensions in the South China Sea and Taiwan. Allianz Trade’s
economists predict that under these downside scenarios, global
growth could be 1.5 percentage points lower, and inflation may
rise by 1 percentage point. The report emphasizes that these pre-
dictions imply that interest rates are likely to remain high for an
extended period.

There is an expectation of modest growth until 2026

According to the Global Economic Outlook Report, moderate
global growth of 2.8% is expected through 2026, which aligns
with long-term averages. Although economic growth in the U.S.
will slow down, the country is still projected to lead global eco-
nomic growth in 2024. In Europe, while momentum continues
to build, Germany is expected to remain an exception, with the
economy only emerging from recession by the end of 2024. The
report also highlights that in China, internal demand will contin-
ue to slow, and despite economic policy easing, the ongoing real
estate crisis is expected to have long-term negative effects that
will only be partially offset.

Continue tightening the belt

According to Allianz Trade’s Global Economic Outlook Report,
“tightening the belt” is becoming necessary again. The report
suggests that, despite reluctance to openly discuss it, fiscal con-
solidation will inevitably return to the agenda in the coming pe-
riod. Experts predict that fiscal consolidation will reduce GDP
growth by an average of 0.3 percentage points in both the U.S. ing months. Experts predict that, with the recovery in consumer
and Europe until 2027. Tax increases, particularly targeting spending, global trade will also see a more sustainable recovery
businesses, appear more likely than cuts in public spending. Ad- in the long run. Overall, the report indicates that the global trade
ditionally, the report notes that in Europe, monetary tightening volume is expected to increase by around 3% during the years
will result in more than 3% of GDP being assumed by investors 2025-2026, but will remain below the long-term average.
annually in the form of debt.
On the other hand, the report highlights that companies are re-
Economists emphasize that inflation is expected to reach the tar- covering through the reduction of their inventories. According
get of 2% by the first half of 2025, which could pave the way for to the report, the increase in revenue and earnings in the second
a stronger loosening cycle in the future. In particular, inflation, quarter was supported by the depletion of company stocks. How-
which surprised downward during the summer months, is antic- ever, the distinction between Europe and the United States is also
ipated to continue to ease, driven by reductions in energy and evident here; despite a slight improvement in companies’ finan-
goods prices. Additionally, “sticky” service inflation is likely to cial positions in the second quarter, fixed capital investments in
ease in parallel with the deceleration of wage growth, contribut- the Euro Area fell 7% below pre-pandemic levels, lagging signif-
ing to a general reduction in overall inflation. icantly behind their developed country counterparts such as the
U.S. and the UK.
Companies have depleted their existing stock levels and have
now started replenishing inventory
For the details of the report: https://www.allianz-trade.com/tr_
TR/ekonomik-arastirmalar/ekonomik-gorunum-raporlari/kure-
This shift indicates a recovery in demand and a positive outlook sel-ekonomik-gorunum-2024-26-buyuk-dengeleme-hareketi.
for global trade, suggesting that businesses are preparing for in- html
creased consumer activity and potentially better sales in the com-