Economic growth in 2024: Why inflation and high interest rates affect the future of the economy

Economic growth in 2024: Why inflation and high interest rates affect the future of the economy

According to a report by www.capital.de, the global economy will continue to be influenced by inflation and high interest rates. These developments have already led to a bleak picture of the future by experts such as Axel Weber, the former Bundesbank president. According to Weber, the dramatic increase in inflation and interest rates is a historic failure by central bankers. But how could these developments affect the market and consumers in the future?

As a result of current developments, various scenarios are possible. On the one hand, increased inflationary pressure could lead to a reduction in consumer purchasing power. This in turn could result in companies having to increase their prices to cover the increased costs. The rise in interest rates could also have an impact on companies' investment activity, as borrowing becomes more expensive and economic expansion could therefore be affected.

Another impact could be increased uncertainty in financial markets, which could lead to increased volatility and a more cautious investment strategy. This could lead to investors turning more to safe assets such as government bonds, which in turn could affect returns.

Current developments show that the economy and financial markets could continue to face major challenges in the future. It is therefore advisable to consider various scenarios and implement appropriate risk management strategies to be prepared for possible turbulence.