The performance of key economic indicators exceeded expectations in 2023,” most major banks and financial institutions concurred in their assessment of the current year, despite unfavorable conditions.
During 2023, interest rates increased as the U.S. Federal Reserve continued its tightening measures to reach record levels, attempting to tackle elevated inflation levels, raising concerns about an economic recession, which did not materialize.
The optimism of these institutions towards the expected global economic performance in 2024 is also on the rise. Despite a slowdown in growth rates, the likelihood of a recession is considered remote, with a soft landing scenario being the most probable in the world’s largest economy, and interest rates, along with inflation, are trending towards moderation.
Here are the highlights from the financial institutions as reviewed by
“Al-Sharq”:Berkeley:
The global economy performed positively this year, with the GDP growing by 2.8% compared to the expected 2%. However, we expect a decline in growth rates in 2024 to 2.4%. Inflation will also decrease, but with varying percentages between countries, registering around 3% in advanced economies and 3.8% in emerging markets (excluding China, which is experiencing deflation).
Additionally, we anticipate that interest rates will be low over the next 12 to 18 months. Conversely, there will be no recession similar to that of 2008.
Lazard:
Inflation will decline, and central banks have completed their interest rate hikes. In the United States, interest rates will start to decline as inflation approaches the 2% target, with the U.S. Federal Reserve planning for a smooth landing scenario that prevents a recession.
Goldman Sachs:
The economic indicators’ performance in 2023 was better than expected. In 2024, we expect the growth rate to decrease from 2.6% to 2.4%, and inflation rates to sustainably decrease from 3% to a range between 2% and 2.5%. However, the level of risks facing the global economy is higher than usual, and the possibility of a recession in the next 12 months remains.
JPMorgan:
The bank expects a smooth landing scenario amid good economic activity and diminishing inflation rates. Nevertheless, it is too early to declare victory for central banks over inflation, and interest rates may be slow to decline, but they may still decrease at rates higher than those anticipated by the market.
Bank of America:
The performance of 2023 exceeded all expectations, and we see that 2024 will be the year in which central banks succeed in achieving a smooth landing, despite being confident that risks outweigh positives.
We also expect global inflation rates to decline, allowing central banks to reduce interest rates during the second half of 2024. The Federal Reserve will begin reducing interest rates in June by 25 basis points each time, according to our estimates.
Citi Bank:
Growth will decline in 2024, but we do not see the global collapse that many fear materializing. We estimate that the growth rate in 2024 will be around 2.2%, then rise to 2.8% in 2025, with expectations of a decline in global inflation rates. In the United States, it will reach 2.5% by the end of 2024.
TD Securities:
Unlike most financial institutions, TD Securities expects the U.S. Federal Reserve to raise interest rates by about 100 basis points before mid-2024 as inflation approaches its 2% target. Inflation is expected to reach around 3% in the first half of 2024.
Europe and Canada may already be experiencing a recession, while the United States may enter a recession by mid-2024, with the Chinese economy achieving growth of around 5%.
