Global Outlook October 2024: looking ahead to 2025

Summary

In the October 2024 edition of the IU's Global Outlook video, Tom Rafy and Josh Bailey discuss the anticipated slowdown of the US economy, projecting GDP growth to decline from 2.4% in 2024 to 1.4% in 2025. They highlight the impact of cooling labor markets and rising interest rates on global economic growth, expected to average 2.6% over the next five years. The US-China relationship remains crucial, with potential for increased tension, especially if political changes occur. Additionally, they identify geopolitical risks concerning Iran's nuclear ambitions and escalating tensions on the Korean Peninsula as key concerns for 2025.

Takeaways

• 📉 The US economy is forecasted to experience a slowdown, with real GDP growth expected to drop from 2.4% in 2024 to 1.4% in 2025.
• 👷‍♂️ The labor market is cooling, leading to cracks in job creation and affecting overall economic performance.
• 💸 High interest rates are impacting economic output, but a technical recession is not anticipated.
• 🌍 Global GDP growth is projected to average 2.6% annually over the next five years, below the 3% growth rate of the 2010s.
• 🇪🇺 Europe is expected to see slow growth, recovering from a weak base, but is unlikely to lead global economic performance.
• 🤝 The US-China relationship will continue to be a central theme in global economics, with ongoing competition across various domains.
• 🌐 Recent diplomatic efforts between the US and China suggest a potential moderation in tensions, though risks remain.
• 🚨 The Iranian nuclear situation poses a risk for escalation, particularly concerning the ongoing conflict in Gaza and diplomatic relations.
• ⚠️ The Korean Peninsula remains a geopolitical concern, especially if North Korea resumes aggressive posturing amid changing US leadership.
• 🔮 Overall, 2025 presents significant economic and geopolitical challenges that will require close monitoring and strategic responses.

Q & A

What is the main topic of the video discussion?

The main topic is the global economic outlook as they approach the end of 2024 and forecast for 2025, focusing on the U.S. economy and international relations.

What factors are contributing to the predicted slowdown of the U.S. economy?

The slowdown is attributed to a cooling labor market, signs of reduced job creation, and the impact of higher interest rates.

What are the GDP growth forecasts for the U.S. economy in 2024 and 2025?

The forecast for real GDP growth is 2.4% for 2024, which is expected to decline to 1.4% in 2025.

How is the slowdown in the U.S. economy expected to affect global economic growth?

The slowdown in the U.S. will weigh on global demand, with global GDP growth projected to average 2.6% over the next five years, which is lower than the 3% average of the 2010s.

What is the current state of the U.S.-China relationship, according to the discussion?

The U.S.-China relationship is seen as a central issue for both nations, with efforts to manage tensions and competition continuing, though there are signs of moderation in their interactions.

What geopolitical risks did Josh Bailey highlight for 2025?

Josh highlighted the Iranian nuclear situation and potential tensions on the Korean Peninsula as key geopolitical risks to monitor in 2025.

What specific concerns exist regarding the Iranian nuclear situation?

There is a risk of escalation due to regional conflicts and the fragility of diplomatic efforts surrounding the nuclear deal, especially with the red lines established by Israel and the U.S.

How might the situation on the Korean Peninsula change in 2025?

With a less diplomatic approach from South Korea's current conservative leadership, there could be increased tensions and saber-rattling from North Korea, particularly if Trump were to return to the White House.

What does the term 'technical recession' refer to in the context of the U.S. economy?

A technical recession typically refers to two consecutive quarters of negative GDP growth; however, it is expected that strong domestic demand will prevent this scenario in the near term.

How do higher interest rates influence the U.S. economy according to the discussion?

Higher interest rates can dampen economic growth by increasing borrowing costs, which affects consumer spending and overall economic output.