Global economic expectations: controlled deceleration and focus on the Federal Reserve.

The global economy is a complex mechanism where every movement in one of its pieces has an impact on the overall functioning. In this context, economic growth projections, central bank monetary policies, and geopolitical decisions are key elements that determine the course of markets and national economies. In this scenario, Citibank has issued a forecast that has generated expectations and reflections in various sectors. According to Citibank's estimates, the global economy would experience a growth of 2.3% this year, after expanding by 2.7% in 2023. Despite geopolitical and technological uncertainties, as well as political challenges at the local level, a "cautiously optimistic" scenario is envisioned where a gradual slowdown is expected without reaching a recession on the horizon of 2024. These projections, developed by Citibank's chief economist, Ernesto Revilla, shed light on what can be expected in the coming years. In the case of the United States, a growth of 1.5% is anticipated for this year, remaining at that level until 2025. Despite being a slowdown compared to the 2.5% recorded in 2023, it is noted that this situation is part of the post-pandemic normalization and the effects of interest rates. On the other hand, the Eurozone projects a growth of 0.7% for this year, with a slight increase towards 2025, reaching 1%. However, it is pointed out that this region is below its long-term growth trend. Regarding China, a growth of 5% is estimated for the current year, decreasing to 4.6% by 2025. The Asian giant, which has been a driving force of the global economy in past decades, is experiencing a phase of gradual deceleration, moving away from the double-digit growth rates it used to achieve. These forecasts have direct implications on the global economy and on the strategies of countries that maintain commercial relations with China. In the Latin American context, a growth of 2.2% is projected for this year, decreasing to 1.8% by 2025. In this sense, it is highlighted that economies like Brazil and Mexico, the largest in the region, will influence the direction of growth, although some variability in the performance of Andean countries is expected, which have faced particular challenges in previous years. However, the main risk identified for the economies of Latin America for the remainder of the year and 2025 does not come from internal factors, but from the US Federal Reserve. The Fed's monetary policy, especially regarding decisions on interest rates, will have a significant impact on the region. That is why Citibank's forecast of three interest rate cuts by the Fed starting in September has generated positive expectations. The slowdown in the US economy, driven by inflation and high interest rates, has led Citibank to anticipate a cycle of rate cuts by the Fed. It is expected that these cuts will help stimulate the economy and reduce inflationary pressure, which would have beneficial effects on countries in Latin America. The possibility of the Fed making three 25-basis-point rate cuts in the second half of the year has been received with optimism by Citibank, which considers this measure would be positive for the region. In summary, Citibank's projections point to a scenario of controlled global deceleration, with varied impacts on regional economies. Attention is focused on the decisions of the US Federal Reserve and how these could influence the course of the global economy in the coming years. In this scenario, caution and anticipation become key elements for navigating a constantly evolving global economic environment.