The year 2023 was not for the faint-hearted, with interest rate rises, increasing inflation, rising political tensions and wars raging in several parts of the world. We are now looking ahead to 2024 through the lens of five major financial institutions to what 2024 might look like: JP Morgan, Goldman Sachs, Citi, UBS and HSBC.
The spectrum of predictions is as wide as it gets from unexpected optimism to measured skepticism, painting a complex picture of the year ahead:
Goldman Sachs is most probably the most bullish of all five banks with "The hard part is over" headline and forecasted real GDP growth of 2.7% for global economy and 2.4% for the US.
Citi's predictions are somehow more cautious and yet optimistic with "Slow then grow and markets' big reset" sentiment. 2024 should start slower and see the economy accelerate as the year progresses.
UBS base case scenario is for a “soft landing,” in which growth slows to just below trend, inflation falls toward central bank targets by the second half of the year, and US interest rates are cut four times in 2024.
HSBC baseline scenario embeds an elevated risk of economic slowdown and mid-single digits corporate growth, this scenario is less optimistic with the current market pricing of soft-landing scenario.
JP Morgan is most probably the most cautious of all with "Too early for a victory lap" sentiment and, forecasts a mild recession as the base case scenario.
JP Morgan and HSBC also emphasise the looming "Credit Maturity Wall" in the next couple years, where around 20% of investment grade bonds in the US and Europe are maturing in 2024-2025. Both banks predict that investment grade issuers will be able to absorb these higher cost of financing. However, the real challenges may appear in the high-yield market, especially beyond 2025 maturities.
Beyond economic scenarios and discussions, the reports also outlined some interesting angles on the investment opportunities and performance views on different asset classes for 2024.
Does 2024 pose to be the year of uncertainty or opportunity? Even the leading financial institutions cannot agree on that. The best is to take the data and make your own conclusions! We have organised top 10 major topics discussed in these reports in the table below.
Gintare Hennick
