Investing.com– Citi analysts said they expected the global economy to perform better in 2024 than initially expected amid easing interest rates and strong momentum in some emerging markets.

Growth in developed economies such as the U.S., UK and Canada is expected to be “notably softer” than seen in the first half of the year, while China is also expected to lag amid sluggish stimulus measures from the government. 

But lower interest rates in developed economies are expected to spur broader easing cycles in emerging markets, helping facilitate growth. 

The global economy is expected to grow by about 2.5% in 2024, slightly below growth seen in the prior year, Citi said. 

The brokerage expects aggregate growth in developed markets to “vanish” in 2024 due to weakness in Germany and broader stagnation in the euro zone. 

The outlook for the U.S. also remains uncertain, although resilience in consumer spending and a deeper easing cycle by the Fed are expected to make for some strength in growth, Citi said. 

But a cooling labor market remains a key source of uncertainty, especially as recent indicators pointed to a steady deterioration in the sector. 

In Japan, Citi said it expects a mild contraction in gross domestic product for 2024, although consumer spending is expected to pick up, also driving inflation higher. 

The Bank of Japan is also expected to hike interest rates further by December, with Citi stating that the central bank has “room to choose when it raises rates.” 

China a point of weakness amid weak consumer sentiment 

Citi said China remained a major point of concern over slowing growth, especially as consumer spending and sentiment continued to disappoint. 

The brokerage noted both manufacturing and service sector activity had lost momentum in recent months, while an extended decline in the property sector showed little signs of abating. 

“What’s striking is that the authorities have been slow in providing policy support. Recent work that we’ve done raises doubts as to whether fiscal policy has on net even been stimulative this year,” Citi analysts said. 

The brokerage expects Chinese GDP to grow 4.7% this year, below the government’s 5% annual target.