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Foreword
Rethinking the macro landscape
Reframing globalisation
Redefining sustainability
2024 Market Outlook Rethinking the macro landscape
Slowing global growth and declining price pressures in 2024 could herald a turning point for bonds. At the same time, continued market volatility makes the case for diversification, quality assets and low volatility strategies.
We expect global growth to slow going into 2024. The risk of a recession is higher over the next 6-12 months, as the lagged cumulative effects of policy tightening start to kick in. However, any recession is likely to be concentrated in the Developed Markets (DM). Most of the major Emerging Market (EM) economies should continue to see growth in the new year. In the US, the tailwind from COVID-related fiscal handouts is fading. Post-COVID household savings have been drawn down and the US savings rate is now materially below its long-term average. Nevertheless, a US recession is unlikely to be deep or
protracted. The balance sheets of non-financial corporates look relatively strong and US household debt remains at manageable levels despite the recent drawdown in savings. The Chinese government’s issuance of additional special central government bonds in the fourth quarter of 2023 raises the year’s fiscal deficit from 3% to 3.8% of GDP and signals policymakers’ intention to stabilise growth in 2024. The government is likely to set 2024’s GDP growth target at around 4.5% to 5%. Infrastructure investment, as well as a continued, albeit gradual, recovery in consumption should drive growth.
Services losing momentum
Global PMI new orders, Sep 23
60
55
Services: 50.8
expansion contraction
50
Composite: 50.0 Manufacturing: 48.4
45
40
35
30
25
20
2010
2012
2014
2016
2018
2020
2022
Source: LSEG Datastream, 4 October 2023. PMI = Purchasing Managers’ Index.
For use with professional clients / qualified investors only. Not approved for further distribution or use with the general public.
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