Asset Management One reviews the Global market in 2023 and looks ahead to see what is in-store for 2024 and beyond.
Since Q4 2023, the US economy has experienced a slowdown due to the noticeable impact of higher interest rates. However, the slowdown in 2024 is expected to be moderate. There will not be an intensification of tightening measures through bank intermediation, and adjustments in the labor market will be limited. We expect a soft landing, and it is unlikely that a recession characterized by a sharp and significant decline in economic growth will take place.
In the banking industry, we are already witnessing lending stances becoming as strict as during past economic downturns. However, there is a higher likelihood that the decrease in bank lending will be limited, even with the banks tightening their lending stance (Figure 1). We expect that the dampening effect of financial tightening on the economy will not significantly intensify, thus becoming one of the factors that mitigate the economic slowdown in 2024.
Furthermore, in the labor market, there continues to be an improvement in the supply-demand balance in 2023. However, many companies, especially those with labor-intensive operations, are still facing labor shortages. According to surveys conducted among small and medium-sized enterprises, the number of companies reporting a shortage of personnel is still higher than it was in 2019, before the Covid-19 pandemic (Figure 2). It is believed that many companies prioritize retaining employment, which has led to a limited increase in job cuts. The mild adjustment in employment would result in limited overall economic impact.
Full article: pdf AMOI Global Outlook 2024