Global inflation to drop to 5.4%, Türkiye’s recovery hopes rise: Bloomberg Economics

Bloomberg Economics (BE) predicts a steady decline in global inflation to 5.4% by the last quarter of the year, with advanced economies seeing significant relief, and even high-inflation countries like Argentina and Türkiye showing signs of improvement.

Global inflation on decline: When will world see relief?

• Global inflation: BE forecasts a significant decline in global inflation rates, projecting a drop from 6.9% in the second quarter of 2024 to 5.4% by the last quarter of the year. This downward trend is expected to continue into 2025, with a predicted rate of 3.2% by the end of the year.

• Advanced economies: Economists at BE believe the peak of global inflation has passed. By the end of 2024, inflation in advanced economies, which stood at 7.8% in 2022 and is expected to be 3.1% by the end of 2023, could fall further to 2.3%.
• Emerging markets: Excluding China, the composite inflation rate in emerging markets was 16.9% in the second quarter of 2024. BE forecasts this rate to decrease to 11.9% by the last quarter of 2024 and further to 6.9% by the end of 2025.

Worst might be over for Türkiye and Argentina

Despite high inflation in countries like Argentina and Türkiye, BE’s chief economist for emerging markets Ziad Daoud suggests that the worst may be behind them.

• Relaxed monetary policies: Daoud highlighted that even in high-inflation countries like Argentina and Türkiye, the situation appears to be improving. The easing of global inflationary pressures is expected to pave the way for more relaxed monetary policies.

Global monetary policies: Easing ahead?

• United States: BE predicts that moderate consumer price increases, combined with a weakening labor market, could lead the Federal Reserve to cut interest rates as early as September 2024.
• Europe: A significant drop in inflation is anticipated in Europe, which may also prompt a rate cut in the same month.
• China: Although facing deflation risks, China is expected to continue utilizing interest rate cuts as a tool to stabilize its economy.

What makes China unique in inflation battle?

• Low inflation: While global inflation pressures are easing, China remains an outlier with low inflation.
• Rise in inflation: BE expects China’s inflation rate to rise slightly, reaching 2% by the last quarter of 2024.
• Deflation risk: Despite the low inflation, China faces deflation risks, which it is countering with interest rate cuts.

Is there global shift toward recovery?

As global inflationary pressures begin to ease, BE’s projections suggest a period of stabilization for the global economy, with high-inflation countries like Argentina and Türkiye potentially seeing improvements. The next few months will be crucial in determining how these trends develop and impact global economic stability.