Overview of Conditions
Updated 20 December 2024: As we close 2024, the OECD’s December Economic Outlook projects global GDP growth to strengthen slightly to 3.3% in 2025 and remain stable at this level through 2026. Another major development is the European Central Bank’s (ECB) new interest rate cut President Christine Lagarde announced mid-December.
The ECB lowered its deposit rate to 3%, marking its fourth cut this year to support weak Eurozone growth. Meanwhile, the U.S. Federal Reserve reduced its target rate to 4.25%-4.5%, signalling a more cautious approach to future cuts amid resilient economic growth and persistent inflation above target. In contrast, China continues easing to 3.1% to address structural challenges and soft demand.
The OECD warns that the rise in import-restrictive measures among major economies could increase business costs and lower living standards, posing additional risks to global trade stability. Stock markets reflect these dynamics, with the U.S. and the U.K. leading: the S&P 500 is at 6,075, and the FTSE 100 at 8,262, supported by strong corporate performance. In contrast, Europe stagnates, and China’s CSI 300 continues to decline amid ongoing economic uncertainty.
See below for more detail on current global business conditions.
Financial Conditions
In this section, we examine interest rates, inflation, and stock market performance in the Eurozone, U.K., U.S. and China using data from the European Central Bank, Federal Reserve, Bank of England and the Peoples Bank of China; and stock market performance using data from The Euro Stoxx 50, S & P 500, FTSE 100, and CSI 300.
Interest Rates & Inflation
The bottom line:
Monetary policies reflect diverging challenges. In the U.S., the Federal Reserve lowered its key interest rate by 25 basis points to a target range of 4.25%-4.5%, marking the third consecutive reduction. Chair Jerome Powell emphasized a cautious approach, signalling fewer cuts in 2025 as inflation remains above target and economic growth stays solid. The Eurozone, cutting rates to 3% as of December 18, underscores concerns about weak growth and slowing inflation, with hints of further easing. The UK, holding steady at 4.75%, continues to grapple with inflation and economic fragility. Meanwhile, China, maintaining rates at 3.1%, struggles with structural weaknesses and soft demand.
The global economy remains divided: cautious stability in the U.S., easing in Europe, and uncertainty in China. Recent data indicate that EU inflation has dipped slightly, while the Federal Reserve has announced another rate cut of 25 basis points, the rate dropped to a range of 4.50% to 4.75%. This move follows a larger 50-bps cut in September, which brought the rate down from a peak of 5.25% to 5.50% for most of 2024. The Eurozone, Canada, and the U.K. have also observed similar cuts. These actions aim to stimulate economic growth while carefully managing inflation risks, fostering a cautiously optimistic outlook for global financial conditions.
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Source: Original Ibec Global chart based on the latest monetary policy reports by the European Central Bank, Bank of England, the Federal Reserve, and the People’s Bank of China.
Interest Rates (as of December 2024)
Source: Ibec Global original chart based on the Consumer Price Index Summary of the US Bureau of Labor Statistics; Eurostat; UK’s Office for National Statistics; China National Bureau of Statistics, Consumer Price Index.
Financial Markets
The bottom line:
By December 2024, U.S. and U.K. stock markets maintain their global lead. The S&P 500 surged to 6,075 points, driven by strong corporate earnings and investor optimism.
The FTSE 100 reached a record 8,262 points, buoyed by energy and commodity sectors. In contrast, the Euro Stoxx 50 edged down to 4,947 points, reflecting stagnant economic growth and subdued investor sentiment in Europe. Meanwhile, China’s CSI 300 fell to 3,911 points, as structural challenges and policy uncertainty weigh on market recovery.
These trends underscore the continued strength of U.S. and U.K. markets amid Europe’s stagnation and China’s struggles.
Source: Ibec Global original chart based on the stock prices of Euro Stoxx 50, FTSE 100, S&P 500 and CSI 300.
Economic Conditions
In this section, we examine GDP growth forecasts for the EU, UK, US and China using data from the OECD, IMF, World Bank and FDI flows using data from OECD and UNCTAD.
GDP Growth
Source: Original Ibec Global chart based on the data from: International Monetary Fund. (October 2024). OECD Economic Outlook, Volume 2024 Issue 2: Preliminary version, World Bank. 2024. Global Economic Prospects, June 2024.
The bottom line:
The global GDP forecast for 2025 remains steady at 3.3%, supported by recovering real incomes and easing inflation. The U.S. leads major economies with projected growth of 2.8% as we end 2024, slowing to 2.4% in 2025.
The Eurozone shows modest recovery, rising from 1.3% to 1.5%, while China faces a slight slowdown from 4.9% to 4.7% due to weak domestic demand. These trends highlight persistent disparities, with the U.S. maintaining solid momentum while Europe and China face structural challenges.
Overall, the OECD highlights a more balanced outlook, with global trade recovering and services outperforming manufacturing. However, regional disparities persist, particularly in Europe and China, where growth momentum remains fragile. The U.S. leads advanced economies, while Asia maintains its role as a global growth driver.
FDI flows
The bottom line:
As of November 2024, the U.S. solidifies its position as the leading hub for FDI, driven by economic resilience and investor confidence. In contrast, Europe faces declining flows due to regulatory complexities and sluggish recovery, with its restrictive investment policies exacerbating the issue.
China’s FDI downturn reflects structural problems and geopolitical tensions, eroding its appeal to investors. The data highlight a strategic shift with investors prioritizing stability and growth potential, favouring the U.S. and dynamic emerging markets in Asia over more volatile or stagnant regions.
Source: Original Ibec Global chart based on OECD data
Source: Original Ibec Global chart based on OECD data
Source: Original Ibec Global chart based on UNCTAD data.
Source: Original Ibec Global chart based on UNCTAD data.
Labour Market
In this section, we examine unemployment rates in the Eurozone, U.K., U.S. and China using data from the US Bureau of Labour Statistics, Eurostat, UK's Office for National Statistics and the National Bureau of Statistics in China.
Unemployment
Source: Ibec Global original chart based on the data from the US Bureau of Labor Statistics; Eurostat; UK’s Office for National Statistics; National Bureau of Statistics of China.
The bottom line:
As of November 2024, labour markets reveal contrasting dynamics. In the U.S. unemployment is steady at 4.1% even though it has increased from the 3.7% where it was last year.
The Eurozone’s slight improvement to 6.3% reflects progress in specific sectors, but restrictive monetary conditions hinder broader recovery.
China’s stability at 5% masks deeper economic challenges, including weakening demand, while the UK’s unchanged rate of 4% highlights stagnation rather than growth.
Productivity
The bottom line:
As of November 2024, global productivity growth continues to face significant challenges. The OECD highlights that productivity trends remain subdued: advanced economies like the U.S. showing decelerating growth despite high overall productivity levels.
The Eurozone continues to grapple with wide disparities in productivity among countries, further complicating effective policy responses. Structural inefficiencies and limited investments in digital transformation and workforce skills are major obstacles.
China's productivity gains, measured by GDP per hour worked, are slowing sharply compared to prior decades, reflecting deeper structural issues, including the aging workforce and inefficiencies in capital allocation. However, Southeast Asian economies exhibit modest productivity improvements, driven by advancements in technology and manufacturing competitiveness.
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Source: Ibec Global original chart based on the estimates from the International Labour Organization (ILO).
Trade
In this section, we examine the value of exports using data from the World Trade Organisation.
Exports
The bottom line:
The OECD's December 2024 updates present a cautiously optimistic trade outlook. Global trade growth for 2024 remains steady at 2.7%, following slight upward revisions earlier in the year. However, the 2025 forecast dips to 3%, driven by geopolitical risks, including conflicts in the Middle East that threaten energy markets and shipping routes. Trade policy uncertainty has risen sharply in recent months, with major economies implementing a growing number of import-restrictive measures.
These restrictions risk increasing import prices, raising production costs for businesses, and lowering living standards for consumers. Despite these challenges, Asia remains the engine of export growth, particularly in electronics and manufacturing, with a projected 7.4% increase in 2024. Europe struggles with a 1.4% decline in exports due to ongoing weaknesses in the automotive and chemicals industries. Meanwhile, Mexico continues to solidify its role as a key G20 economy, benefiting from nearshoring trends and its strategic trade ties with the U.S.
Source: Ibec Global original chart based on the data from the April 2024 WTO Global Trade Outlook and Statistics.
CEO Sentiment & Outlook
In this section, we analyse CEO sentiment and outlook by aggregating multiple globally-renowned sources including from KPMG, EY and PwC and Deloitte & Fortune.
The bottom line:
The CEOs surveyed express moderated optimism in a complex outlook shaped by rapid technological advancements, geopolitical tensions, and interest rates uncertainty. A common emphasis across the surveys is on the integration and ethical implementation of generative AI as a major strategic focus, reflecting a drive towards innovation to secure competitive advantage. Nevertheless, the degree of urgency and the approach to integrating AI varies across sources, as well as overall optimism towards the real capacity of AI to deliver actual revenue growth besides efficiency and processes optimization.
Additionally, there is a notable shift towards sustainability and ESG (Environmental, Social, Governance) considerations, not merely as compliance but as core elements of business strategy aimed at long-term resilience and growth. Despite challenges like rising interest rates and geopolitical instability, CEOs show a commitment to adapt to the challenging environment by leveraging technology and sustainable practices.
Overall Sentiment
KPMG
73%
global CEOs are confident about the economy over the next three years, compared to 71% in 2022.
EY
64%
expect an increase in revenue growth.
PwC
Slight optimism surge but less confidence that their own companies will grow revenue.
Deloitte & Fortune
27%
are optimistic about the global economy, compared to just 7% in Fall 2023.
Key highlight
KPMG
77%
say that tightening monetary policies could prolong any potential or current recessions, while over the next three years, 77 percent believe cost-of-living pressures will negatively impact their organization’s prosperity.
EY
95%
of CEOs are planning to maintain or accelerate their transformational change in 2024.
PwC
45%
of CEOs believe their company will not be viable in ten years if it stays on its current path.
Deloitte & Fortune
almost 50%
of CEOs believe the US Federal Reserve will cut interest rates by the end of the third quarter, but 1 in 10 doubt they'll be reduced in 2024.
Sustainability
KPMG
69%
of global CEOs have fully embedded ESG into their business as a means to create value. Growing relevance for customer relationships but afraid that progress is not enough for stakeholders.
PwC
65%
of CEOs report progress in decarbonization, being energy efficiency improvements the most popular action among CEOs.
KPMG
Generative AI is among their top investment priorities, but CEOs are concerned with an ethical implementation of AI.
EY
76%
of CEOs agree that AI will deliver efficiency benefits but have little impact on revenue growth. However there is a clear desire to exploit the potential of technology and AI to improve efficiencies and boost financial performance.
PwC
60%
of CEOs expect it to improve product or service quality, but 70% report to increase competition, drive changes in business models or require new skills in workforce.
Deloitte & Fortune
Adoption rates continue to increase as CEOs look beyond efficiencies and automation to Generative AI capabilities to find new insights, reduce operational costs, and speed up innovation.
Top Concern
KPMG
Geopolitics
and political uncertainty vs. emerging and disruptive technology in 2022.
EY
78%
of CEOs are worried about the potential rise of populist movements to increase geopolitical uncertainty.
PwC
24%
of CEOs see inflation as their top concern, while macroeconomic volatility (24%), cyber risks (21%) and geopolitical conflict (18%) also remain top concerns for CEOs.
Deloitte & Fortune
65%
put geopolitical instability as the top external business disruptor.
Source: Original Ibec Global based on the results of KPMG 2023 CEO Outlook; EY 2024 CEO Outlook Pulse; PwC 27th Annual Global CEO Survey; Fortune/Deloitte Winter 2024 CEO Survey Insights.