Normalised Growth

The World Bank projects global growth to stabilize at 2.6% in 2024, with a slight increase to 2.7% in 2025-2026. This rate is lower than the 3.1% average experienced in the decade before the pandemic. Developing economies are expected to grow at an average rate of 4% over 2024-25, which is slightly slower than in 2023. In advanced economies, growth is forecast to remain steady at 1.5% in 2024, before rising to 1.7% in 2025. Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, although the decline is slower than projected six months ago. As a result, many central banks are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to stay high compared to recent decades, averaging about 4% over 2025-26, roughly double the 2000-19 average.

In June 2024, US indexes S&P 500 and Nasdaq reached record highs, driven by AI stocks. Investors remain optimistic about the long-term potential of AI, justifying the premium valuations with expected growth over the next three to five years. AI technology is seen as being in its early stages, with many sectors set to benefit. Beyond hardware producers and semiconductor stocks, there are bright investment opportunities in other areas of AI. Investors should consider diversifying into a global portfolio to participate in global growth.