What’s going on here?
Economists now expect more sluggish growth in 2024, according to Consensus Economics.
What does this mean?
Economists, it seems, have a penchant for playing the party pooper. Despite central banks seemingly getting a handle on inflation and economies steadily progressing, a recent survey by the consulting firm Consensus Economics paints a less rosy picture. The naysaying pundits project the global economy to grow by a mere 2.1% next year, a dip from their earlier 2.4% estimate. All in all, then, it looks like 2024 might have more in its arsenal than just the Paris Olympics, record temperatures, and a no-holds-barred US presidential race…
Why should I care?
For markets: In this year’s shadow.
The crux of the economists’ argument is that 2023 might outperform expectations, making it challenging for 2024 to match up. After all, this year’s robustness could prompt central banks to keep interest rates high, potentially slowing global economies next year. But before you start tearing up, let’s be frank: the risks are real, true, but economists have made a habit of being Debbie Downers lately – so you’d forgive some glass-half-full folk for taking these gloomy predictions with a grain of salt.
The bigger picture: Stay alert.
All jokes aside, cautious observers might have a point. For one, economies have held up far better than anyone expected, so it’s only natural to worry that this momentum can’t last. And while heightened interest rates haven’t wreaked much havoc yet – sorry, Silicon Valley Bank – the real impact might just be biding its time. Worrywarts will point out that it takes time for the pain from higher borrowing costs to filter through to the real economy: just ask nervous homeowners in countries where mortgage rates generally aren’t locked in long-term, who are already biting their nails about upcoming refinancing.
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