A new normal for the global economy is foreseen by Davos leaders.

• Last year, the normalization of consumption, trade, and inflation was stated by Christine Lagarde, president of the European Central Bank.
• In 2024, Lagarde stated that despite the three trends she identified representing a "normalization," we are not heading towards "normality."
• Germany's Finance Minister, Christian Lindner, described the current economic climate as the "new normal."

Christine Lagarde, the President of the European Central Bank, stated that she does not anticipate a return to economic "normality" in 2024, even though certain data points have been balanced over the past 12 months.

At the World Economic Forum in Davos, Switzerland, Lagarde stated that the post-pandemic period is "unusual, exceptional, and challenging to analyze." She pointed out three trends that started to stabilize last year: consumption, trade, and inflation.

During the pandemic, spending decreased and savings increased, while global trade was also affected. In October 2022, euro zone inflation reached 10.6%, but it dropped off in 2023, ending at 2.9% in December.

Lagarde stated on Friday that in 23, the normalization process has begun. She pointed out that while consumption remains a driving force for growth worldwide, the benefits of the tailwind are gradually fading. Lagarde explained that consumption softened as the jobs market became less tight and consumers' savings reduced.

Lagarde stated that global trade numbers increased for the first time in many months in October 2022, despite consumers' preference for buying services over goods in 2021 and 2022 disrupting trade.

In October, the World Trade Organization (WTO) forecasted that global trade will grow by 3.3% in 2024.

Inflation is decreasing globally, as evidenced by the decline in both headline and core inflation in November, according to Lagarde.

Lagarde stated on the panel, "So that's what I call the normalization we have observed in '23. And maybe you'll give me the floor another time to discuss how it is not normality that we are heading towards."

The ECB decided to keep rates steady for the second consecutive time in December, changing its inflation forecast from "high for an extended period" to "a gradual decline in the coming year."

While on the same panel, Ngozi Okonjo-Iweala, Director General of the WTO, stated that the economy is "maybe moving towards normalization," but she emphasized that "trade growth is still trending below GDP growth."

Geopolitical conflicts, disruption in the Red Sea, and elections around the world pose uncertainties that make forecasting "difficult," according to Okonjo-Iweala.

A ‘new normal’

Germany's Finance Minister, Christian Lindner, described the current economic climate as the "new normal."

Christine Lagarde stated on the WEF panel that the normalization process is underway, and we are currently experiencing a new normal. She added that 2023 will mark the beginning of this new normal.

Lindner stated that we must consider the race of artificial intelligence, the geopolitical tensions, and the threat of fragmentation that we will face in the coming years. Additionally, the high debt levels resulting from the pandemic and the energy price hikes have limited our financial resources to finance transformation, leaving us with little growth prospects for the global economy.

"Did 2023 bring me hope? ... I would say it was a call to action because we need to adjust some policies and ... I believe we are at the start of a new era of structural reforms," he stated.

In 2023, Germany's economy, which is Europe's largest, contracted 0.3% year-over-year, according to the Federal Statistical Office. The office stated that the German economy remained stagnant in the third quarter, indicating that the country had just barely avoided a technical recession.

— CNBC’s Ruxandra Iordache and Jenni Reid contributed to this report.