An upbeat outlook
Oxford data shows that labor markets remain tight, particularly in advanced economies, with low unemployment and large numbers of job openings. But Harrison said wage growth pressures should ease as general inflation numbers continue to fall.
The fairly strong predictions for the world economy come with a few caveats. First, if interest rate reductions don’t commence, a lengthy period of high rates could put a freeze on credit and spark several years of meager growth. Second, escalated tensions in the Middle East or between China and Taiwan could trigger consequences ranging from an oil price spike to trade and technological barriers against China that could have serious global economic consequences.
Conflict in the Middle East already is causing uncertainty in the oil price outlook and an uptick in freight rates as attacks on commercial vessels in the popular Red Sea corridor through the Suez Canal have disrupted shipping. An Oxford chart shows that an alternate route — around the Cape of Good Hope on the southern tip of Africa — can take up to two weeks longer for a typical shipping journey from Shanghai to Rotterdam.
Nonetheless, Oxford predicts that the Red Sea attacks are unlikely to severely disrupt efforts to curb inflation in Europe. And globally, Oxford’s outlook for growth is optimistic, particularly for the second half of the year.
“Generally, it’s quite an upbeat outlook for 2024,” Harrison said, “much stronger than anybody predicted before.”
